Sustainable Development and Innovation in the Energy Sector 354023103X, 9783540231035

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Sustainable Development and Innovation in the Energy Sector

Ulrich Steger • Wouter Achterberg (g) • Kornelis Blok Henning Bode • Walter Frenz • Corinna Gather Gerd Hanekamp • Dieter Imboden • Matthias Jahnke Michael Kost • Rudi Kurz • Hans G. Nutzinger Thomas Ziesemer

Sustainable Development and Innovation in the Energy Sector With 33 Figures

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For the Authors: Professor Dr. Ulrich Steger IMD Lausanne P.O. Box 915, 1001 Lausanne Switzerland

Editing: Friederike Wütscher Europäische Akademie GmbH Wilhelmstraße 56, 53474 Bad Neuenahr-Ahrweiler Germany

Library of Congress Control Number: 2004111215 The German edition of this book was published under the title „Nachhaltige Entwicklung und Innovation im Energiebereich“ by Ulrich Steger et al, © Springer-Verlag Berlin Heidelberg New York 2002 ISBN 3-540-23103-X Springer Berlin Heidelberg New York This work is subject to copyright. All rights are reserved, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitations, broadcasting, reproduction on microfilm or in any other way, and storage in data banks. Duplication of this publication or parts thereof is permitted only under the provisions of the German Copyright Law of September 9, 1965, in its current version, and permission for use must always be obtained from Springer. Violations are liable to prosecution under the German Copyright Law. Springer is a part of Springer Science+Business Media springeronline.com © Springer-Verlag Berlin Heidelberg 2005 Printed in Germany The use of general descriptive names, registered names, trademarks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. Cover design: Erich Kirchner Production: Luisa Tonarelli Typesetting: Köllen Druck + Verlag GmbH, Bonn + Berlin Printing: Mercedes Druck, Berlin Binding: Stein + Lehmann, Berlin Printed on acid-free paper

30/3141/LT – 5 4 3 2 1 0

Preface to the Translation

The Europäische Akademie zur Erforschung von Folgen wissenschaftlich-technischer Entwicklungen Bad Neuenahr-Ahrweiler GmbH is concerned with the scientific study of the consequences of scientific and technological advance both for the individual and social life and for the natural environment. The Europäische Akademie intends to contribute to a rational way of society of dealing with the consequences of scientific and technological developments. This aim is mainly realised in the development of recommendations for options to act from the point of view of a long-term societal acceptance. The work of the Europäische Akademie mostly is carried out in temporary interdisciplinary project groups whose members are notable scientists from various European universities. Overarching issues, e.g. from the fields of Technology Assessment or Ethics of Science, are dealt with by the staff of the Europäische Akademie. The results of the work of the Europäische Akademie is published in the series “Wissenschaftsethik and Technikfolgenbeurteilung” (Ethics of Science and Technology Assessment), Springer Verlag. The academy’s study report ‘Nachhaltige Entwicklung und Innovation im Energiebereich’ was published in October 2002. It contains a straightforward strategy how innovations can help to achieve a sustainable development in the energy sector. The academy decided to provide for an English translation of this report that is published in the present volume in order to make this strategy available to a wider scope of recipients.

Bad Neuenahr-Ahrweiler, June 2004

Carl Friedrich Gethmann

Preface

In discussions concerning sustainable development, innovations are often cited as a “miracle cure”. Through innovations, we are to prevent a situation where an increase in output leads to an increase in the consumption of natural resources. This means for the of energy sector: Innovations should help us to reconcile the further growth of the national products of the industrial countries, and at?? the backlog demand of the developing and emerging nations, with a reduction in the consumption of non-renewable energy resources, which must not give rise, however, to an inappropriate consumption of other resources. The core question addressed by the interdisciplinary project group, “Sustainable development and innovation in the energy sector“, which was established by the Europäische Akademie (european academy) in September 2000, was therefore: “To what extent can innovations lead to a sustainable energy system?” The members of the group were selected according to their competences within their disciplines with regard to the subject to be dealt with. The project time frame was 20 months, of which 13 days were spent in plenary session. The final report presented here derives from chapters, which were drafted, under the direction of one of the group members, by individual working groups before being integrated by the plenum. The work of the project group was based on the judgment that “interdisciplinary research” does not exist as such, but disciplinary competences are a prerequisite for dealing with individual aspects of the subject. An integration of the various disciplinary perspectives, methodologies and results with regard to the non-disciplinary question at hand follows as the second step. The procedure pursued by the group was transdisciplinary, in this sense. The result is a text that is consistent in itself, and a coherent argumentation that can be examined step by step (even if the disciplinary background of the “original author” is easily detected in some sections of the report). The group was open to continuous inspection by external specialists. The work schedule was discussed at the kick-off workshop in January 2001. We thank our colleagues, Professor Dr. Wilhelm Althammer (Handelshochschule Leipzig), Professor Dr. Nicholas Ashford (MIT), Dr. Gerd Eisenbeiß (Forschungszentrum Jülich), Dr. Klaus Rennings (ZEW Mannheim), Dr. Herwig Unnerstall (Universität Leipzig), Professor Dr. Alfred Voß (Universität Stuttgart) and Professor Dr. C.-J. Winter (Energon) for their valuable suggestions and pointed criticism, which both helped to provide a precise orientation for this study. At the mid-term workshop in November 2001, a first draft was presented to the following colleagues: Professor Dr. Dr. Brigitte Falkenburg (Universität Dortmund), Professor Dr. Wilhelm Althammer (Handelshochschule Leipzig), Dr. Gerd Eisenbeiß (Forschungszentrum Jülich), PD Dr. Volker Radke (Berufsakademie Ravensburg),

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Dr. Klaus Rennings (ZEW, Mannheim) and Dr. Herwig Unnerstall (Umweltforschungszentrum Leipzig). We also extend our thanks to the participants of that meeting, for their meticulous comments, which later helped to round off the study. Thanks to a good working discipline, the materials on which the discussions were based were ready in time for almost every session. The intellectually stimulating working atmosphere, characterized by professional respect and friendly cooperation, allowed for intensive, constructive, at times controversial discussions and mutual learning throughout various perspectives and methods. The group’s productivity was fostered, not least, by the hospitality of the Ahr valley, and the friendly and efficient services, with which the Academy staff supported our work, especially Ms. Pauels, to whom we would like to express our gratitude. We also thank Mr. Jochen Markard and Mr. Joachim Schmidt-Bisewski, who accompanied the project through the early stages, as well as Ms. Sevim Kilic of the european academy, who worked on the text and prepared it for publication. Lausanne, June 2002

Table of Contents

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

2

3

1

Problem Definition, Tasks, Procedure and Derivation of Recommendations for Action . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

1.1 1.2 1.3 1.4

Problem definition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Tasks of the working group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Deriving recommendations for action . . . . . . . . . . . . . . . . . . . . . . . Structure of the study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 17 19 20

Terminological and Conceptional Foundations . . . . . . . . . . . . .

23

2.1 Sustainability and sustainable development . . . . . . . . . . . . . . . . . . 2.1.1 Terminological differentiation . . . . . . . . . . . . . . . . . . . . . . . 2.1.2 Sustainability and sustainable development . . . . . . . . . . . . 2.1.3 Different concepts of sustainability . . . . . . . . . . . . . . . . . . . 2.2 Sustainability and energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2.1 The laws of thermodynamics and the concept of energy . . 2.2.2 Energy systems in the biosphere and anthroposphere . . . . 2.3 Innovation and sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Basic context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 The concept and types of innovation . . . . . . . . . . . . . . . . . . 2.3.3 The innovation process: Inside the Black Box . . . . . . . . . . 2.3.4 Determining factors of innovation activity . . . . . . . . . . . . . 2.3.5 Sustainable innovation policy . . . . . . . . . . . . . . . . . . . . . . . .

23 23 24 27 30 31 32 34 34 35 37 43 45

Normative Criteria for Evaluation and Decision-Making . . . .

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3.1 Risk assessment and recommendations for action . . . . . . . . . . . . . 3.1.1 Scientific policy consulting . . . . . . . . . . . . . . . . . . . . . . . . 3.1.2 Theoretical and practical perspectives . . . . . . . . . . . . . . . . 3.2 Sustainable development and justice . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.2 Political approaches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.3 The theory of justice (Barry) . . . . . . . . . . . . . . . . . . . . . . . 3.2.4 Vulnerability, the future and the environment (Goodin) . . 3.3 Efficiency and sufficiency – discussing sustainability in the theoretical and practical terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Interim conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

51 51 52 55 55 56 57 60 61 62

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Towards a Sustainable Energy System – Legal Basis, Deficits and Points of Reference . . . . . . . . . . . . . . . . . . . . . . . . .

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4.1 Fundamental legal standards for a sustainable energy system . . . . 65 4.1.1 Developments in international law concerning climate protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 4.1.2 The legal framework in European law . . . . . . . . . . . . . . . . 71 4.1.3 Constitutional framework . . . . . . . . . . . . . . . . . . . . . . . . . . 75 4.1.4 A duty to protect the environment? . . . . . . . . . . . . . . . . . . 75 4.1.5 Implementation in energy law . . . . . . . . . . . . . . . . . . . . . . 76 4.1.6 Implementation in regional planning and mining law . . . . 77 4.1.7 International obligations concerning energy security . . . . 79 4.2 Evaluation of the global energy system under criteria of sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 4.2.1 Characteristics of the present energy system . . . . . . . . . . . 81 4.2.2 Prognoses for the development of the global energy system over the coming 100 years . . . . . . . . . . . . . . . . . . . . . . . . . 82 4.2.3 Excursus: Electricity, deregulation and sustainability . . . . 85 4.2.4 Assessing sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 4.2.5 Operationalizing critical sustainability: the “time of safe practice” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 4.3 Reference points for the sustainable supply of energy on a global scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 4.3.1 Options for change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 4.3.2 The 2000-Watt benchmark: sustainable comfort through intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 5

Potentials for the Sustainable Development of Energy Systems 105 5.1 5.2 5.3 5.4 5.5

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Technical energy efficiency improvement . . . . . . . . . . . . . . . . . . . Renewable energy sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Future images: possible developments and effects . . . . . . . . . . . . Conclusions: What can be learned from history? . . . . . . . . . . . . . 5.5.1 Sustainable energy technologies in the innovation trap . . . 5.5.2 Substitution of energy carriers . . . . . . . . . . . . . . . . . . . . . . 5.5.3 Final conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

105 106 112 117 124 124 126 127

The Reality of Sustainability: Conflicts of Aims in the Choice of Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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6.1 Status of the theoretical discussion . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Environmental protection versus economic and social aims . . . . . 6.2.1 Environment versus employment . . . . . . . . . . . . . . . . . . . . 6.2.2 Environment versus the reduction of monopoly power . . . 6.2.3 Environment versus trade liberalization . . . . . . . . . . . . . . . 6.2.4 Environment versus capital flow . . . . . . . . . . . . . . . . . . . . 6.2.5 Environment versus development policy . . . . . . . . . . . . . . 6.2.6 Environment versus supporting innovation . . . . . . . . . . . .

129 131 131 135 136 137 139 140

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6.3 Standards arising from European law for weighing conflicting aims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1 Free movement of goods . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Problems surrounding the EEG . . . . . . . . . . . . . . . . . . . . . 6.3.3 Justification for restrictions for environmental reasons . . . 6.3.4 Aids and their justification . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.5 Possible ways of shaping the energy system following the ECJ judgment on the Stromeinspeisungsgesetz . . . . . . . . . 6.3.6 Competition and environmental protection . . . . . . . . . . . . 6.4 Energy-relevant research and technology policies of the European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Strategies for Accelerating Sustainable Energy Innovations

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141 142 143 143 146 146 148 149 155

7.1 Reinstating energy as a strategic priority . . . . . . . . . . . . . . . . . . . 155 7.2 Improving the framework conditions . . . . . . . . . . . . . . . . . . . . . . 158 7.2.1 Defining the limits of using natural resources . . . . . . . . . . 158 7.2.2 Using the market: Signs of scarcities induce sustainable innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 7.2.3 Providing infrastructures and generating competences towards sustainability (the technology push) . . . . . . . . . . . 160 7.3 Action field energy efficiency in industry: Accelerated market introduction through subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 7.3.1 The Dutch model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 7.3.2 General considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 7.3.3 Ways of financing energy saving measures . . . . . . . . . . . . 171 7.4 Action field energy efficiency in industry: Self-commitments as an instrument for the rapid diffusion of the “best available technology“ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 7.4.1 General considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 7.4.2 Self-commitments for the reduction of CO2 emissions . . . 175 7.5 Technology Procurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 7.6 Action field energy efficiency in households . . . . . . . . . . . . . . . . 178 7.6.1 Sustainable energy supply and the sovereignty of the consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 7.6.2 Greenpricing of eco-electricity . . . . . . . . . . . . . . . . . . . . . 179 7.6.3 “Discriminating” labeling . . . . . . . . . . . . . . . . . . . . . . . . . 180 7.6.4 “Public Private Partnership” and unconventional marketing campaigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 7.7 Action field transport: Only “packages” can produce innovations 185 7.8 Regenerative energy sources in the field of action . . . . . . . . . . . . 187 7.8.1 General considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 7.8.2 Technology-specific support measures . . . . . . . . . . . . . . . 188 7.8.3 Excursus: Can we choose between different learning curves? – Outlines of a theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190

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On the Political Enforceability of a Sustainable Innovation Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 Actors in the “sustainability arena” . . . . . . . . . . . . . . . . . . . . . . . . 8.2 The attractiveness of sustainability goals from the perspective of selected actor groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Instruments and their attraction from the perspective of selected actor groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Starting points for improving the chances for successful implementation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Conclusions and perspectives: an alliance for sustainable energy innovations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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193 193 193 200 203 206

Responsibility for the “Energy Hunger” of the Developing Countries – How Sustainable Energy Innovations Can Help

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9.1 9.2 9.3 9.4 9.5 9.6

Basic considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Reorientation of development co-operation in the energy sector . Existing initiatives for sustainable energy innovations . . . . . . . . . What can be done by the EU? . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global enterprises and “Technology Sharing” . . . . . . . . . . . . . . . Outlook and further research issues . . . . . . . . . . . . . . . . . . . . . . .

211 212 214 217 218 221

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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A.1 The global energy system . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.1.1 Development of the global use of energy . . . . . . . . . . . . . . A.1.2 Energy production and use in the EU . . . . . . . . . . . . . . . . A.1.3 Energy scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.2 Unemployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.2.1 Elasticity issues in efficiency wage models . . . . . . . . . . . . A.2.2 Elasticity issues in negotiation models . . . . . . . . . . . . . . . A.3 Energy-relevant science and technology policies of the European Union – an overview . . . . . . . . . . . . . . . . . . . . . . . . . . . A.3.1 Importance and integration of sustainability aspects in European energy policies . . . . . . . . . . . . . . . . . . . . . . . . . . A.3.2 Overview of energy-relevant RTD programs of the European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A.3.3 The research priorities “Energy” and “Transport” in the 6th RTD framework program . . . . . . . . . . . . . . . . . . . . . . . A.3.4 Specific programs and instruments . . . . . . . . . . . . . . . . . . A.3.5 Conclusion and outlook . . . . . . . . . . . . . . . . . . . . . . . . . . .

223 223 224 225 233 233 239 241 241 242 245 249 249

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

251

List of Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

263

List of Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Summary

Introduction The discussion seems to be paradox: Almost every energy scenario is based on trends that would lead to an enormous growth in the demand for energy in the coming decades. Meanwhile, at international conferences, among other places, one is concerned with the opposite outlook, a massive reduction of greenhouse gas emissions, especially of CO2 emissions caused by energy consumption. Experts also point out the political risk of depending on mineral oil and remind us of the fact that resources are not inexhaustible. How can this chasm be overcome? How can we build a more sustainable energy system from the existing one? Hopes are mostly pinned on technological progress and innovations. So far, however, there are no specific suggestions concerning the extent to which innovations can really contribute to reconciling ever-growing energy consumption with the limitations regarding the availability of resources and the environment, as well as with the structural demands on any energy system. The aim of this study is to bring together economic, legal, scientific and philosophical competencies with a view to developing such proposals. This task requires clear focusing on the intersection of the three central issues, i.e. energy, sustainable development and innovation. A comprehensive treatment of the three subject fields was not intended. Neither could many of the debates in this context be dealt with beyond their relevance for the strategy proposal of this study. In deriving our recommendations, the aims laid down by democratically legitimized agencies were taken into account, no matter how vague these aims are, especially on the international level. An important part of our work concerned the analysis of conflicting objectives in economic policy and the question of how such conflicts can be overcome through a more comprehensive, incentive-based mix of instruments tailored to the specific substance of an innovation.

Terminological and conceptional foundations Since a sound investigation cannot be performed without a clearly defined terminological and conceptional framework, we will start by inspecting the central concepts of sustainability, energy and innovation. The idea of sustainability with its two normative cornerstones of intra- and intergenerational justice has to be made concrete especially for the area of energy which is based mostly on exhaustible energy sources. Instead of a static concept of stocks, which conceptually excludes a sustainable use of limited resources, a dynamic concept of flows (current use) is introduced, which is based on the substitution of non-

2

Summary

renewable resources by renewable ones and on the continuous creation of new, more efficient ways of using resources. In this way, the need for innovations in this area is, at least implicitly, addressed. If, by appropriate innovations, one succeeds in reducing, the use of exhaustible resources in production and consumption, so that a lower consumption of such limited stocks will suffice in the future, the chances to utilize such declining resources can be maintained or even improved in some cases. The possibility of such chances, however, does not imply that, faced with the present trends in the areas of energy use, strains on the environment, private consumption and population development, a path of “sustainable development” can actually be found. For the sake of clarity, our analysis distinguishes between sustainability and sustainable development: The regulative idea of sustainability initiates and accompanies, with a practical intention, a search and learning process which leads to the more concrete concept of sustainable development, whereby potentials and possibilities for action towards sustainability can be identified; hence sustainable development is regarded, in principle, as a guide for action. Considering the multitude of efforts to define “sustainable development” – by now, there are more than 200 of them after fifteen years of scientific and political discussions –, one cannot but admit that this concept is still very vague or, sometimes, even mired in confusion. In the present discussion of the problems surrounding sustainability, a first approach leads to the observation of three different ways of dealing with the varied meanings of “sustainable development”: Apart from sheer disapproval (because of the “wooliness” of the concept) and an integrative strategy (by burdening the concept with everything that happens to suit one’s purposes), there is another possible attitude, which is shared by our group: the effort to deal with the concept in a productive manner and to define it as precisely as possible according to scientific criteria. This involves comparing various possible definitions of the concept and asking the question which concrete conclusions follow for the central research question of our investigation for each case. This path is taken in neoclassical environmental economics on the one hand and on the other hand especially by ecological economics, the “science of sustainability”. One has to find a balance between overdetermination and underdetermination of this concept and one should neither burden it with specific requirements which meet the most stringent ecological criteria, but make it an unachievable ideal, nor should one leave it so vague that it can mean everything and effect nothing: In principle, sustainable development must be an operational concept. The various concepts ranging from “weak” to “very strong” sustainability differ with regard to assumptions about substitution and complementarity between manmade and natural capital. This study applies the concept of critical sustainability based on a concept of critical natural capital, taking into account few, but crucial and hence critical “crash barriers” or “bottlenecks”. Our interpretation of sustainability thus is related to the far-advanced discussion of setting environmental standards. Energy may determine our everyday life and constitute an important production factor in economic theory; from the physics point of view, however, it is a rather abstract entity, which can only be defined accurately in terms of a differentiated mathematical model. Historically, the concept of energy was initially defined sim-

Terminological and conceptional foundations

3

ply as the “potential to perform work”. In that sense, of course, energy is not conserved; this is why the notion of “energy consumption” has become common usage. The connection between the, at first, entirely different concepts of “energy” and “heat” was clarified only in the 19th century, with the formulation of the First Law of Thermodynamics stating that energy is preserved, i.e. it is neither created nor destroyed, but just transformed from one form into another. (At the beginning of the 20th century, the concept of energy was extended by Einstein in his theory of special relativity, which includes mass as a form of energy.) Hence, energy consumption actually means energy degradation i.e. transforming valuable or available energy (exergy) into lower-value or non-available energy (anergy). The boundary between exergy and anergy is not absolute, but depends on the system considered. For instance, water at a temperature of 20 degree Celsius in an environment at zero degree contains usable energy (exergy), while this would not be the case at an ambient temperature of 20 degree. The energy system (of a country or the Earth as a whole) is defined as the overall structure of the primary energy resources being used, the infrastructure for their distribution and transformation into final energy and the specific demand structure of so-called energy services. With regard to the quality of the energy, the distinction between the demand for heat or work, respectively, plays a special role, as well as the differentiation between stationary and mobile demand and the function of electricity. Together the supply and demand structures determine the potential for changing an existing given energy system. The term innovation describes a new problem solution prevailing in the market, in connection with new factor combinations. Sustainable innovation means factor combinations and new problem solutions that lead to less environmental strain and a reduced consumption of resources, without necessitating restrictions on other social objectives. An innovation does not have to be a new technological solution; it can also be a new service or a new form of organization. In order to invigorate sustainable innovation, one requires knowledge on innovation determinants. The extent, the direction and the speed of innovation activity in a national economy depend on a multitude of factors, which are sometimes summarized as the “national innovation system”; these reach far beyond research and developments politics, touching on tax and education systems. In the course of European integration, it has become more appropriate in some areas to speak of a European innovation system. This entire context needs reshaping, if innovation activity is to aim at a sparing use of resources. For policies concerning innovations a double strategy appears to be called for, which, on the one hand, aims at shortterm effects while, on the other, providing longer-term direction. Through general improvements of the framework for sustainable innovation activity (e.g. regulation reform, tax reform, basic research priorities), the search efforts of scientists and inventors are steered into a different direction; the common pool of knowledge and ideas (the pool of inventions) is enriched accordingly. This part of the double strategy requires more time and has a general increase of sustainable innovation activity as its objective, rather than sector-specific potentials or specific types of innovation. These components complement each other. Successful innovation policies emerge from the well-adjusted combination of both. As the transitions between the

4

Summary

two kinds of innovation policies are fluid, arguments (partly shaped by ideology) about which one to choose will be unfruitful. Sustainable innovation policies as a whole have the objective to change the framework in such a way that the chances of sustainable innovation potentials to prevail in the market are improved. The advance of the framework for sustainable innovations finds itself confronted with the problem that successes are the result of long-term developments and cannot be causally attributed to certain changes of individual conditions. Hence, the political acceptance of reform especially of this kind is difficult to achieve. From the factors of success and the obstacles thus identified, political recommendations can now be derived, where – after the acknowledgement of the principal need for innovation policies by the state – the choice of the concrete technology, the instruments, their dosage and the phase specifics are the main concerns. The recommendation emerging is a well-dosed combination of sponsorship for research far from the market (fundamental research), a search and discover function through competition, followed by support for an accelerated diffusion, and a general improvement of the conditions for sustainable innovation activity.

Normative evaluation and decision criteria The application of traditional rules of decision-making requires a precise formulation of the relevant options for action and the environmental conditions influencing the effects of the action. However, for those cases where it is not clear which environmental conditions must be taken into consideration (decisions under profound uncertainty), these rules cannot be applied. Since long-term environmental transformations are characterized by profound uncertainty, different techniques of decision making have to be applied. In such cases, environmental politics calls upon the “precautionary principle”, according to which preventive measures are permitted even if the scientific evidence is not conclusive, but merely plausible. The costs of such measures must be proportional (principle of proportionality), preferably, due to the profound uncertainty involved, in comparison to another end easier to specify. Precautionary measures with regard to climate change, for instance, can be assessed through the ends of secure supplies and a reliable energy system. A set of ends for a sustainable reorganization of the energy system is listed in the following table: [Table 3.1] Objectives for a sustainable restructuring of the energy system

Objectives

Concretization

Availability of resources

Period of secure practice

Energy system

Reliability (end user), openness of options, risk avoidance

Environment

Climate change, emissions, surface consumption

Whenever in this study we point out the necessity of a sustainable restructuring of the energy system, one has to keep in mind all of the ends cited above. However,

Normative evaluation and decision criteria

5

for this set of ends, the reduction of CO2 emissions can serve as a “guiding indicator” that is supplemented by further indicators (surface consumption, openness of options etc.) in a particular context. Every concept of sustainability involves certain normative decisions with specific ethical implications. The position that there is no such thing as an obligation towards future generations is – as far as we can see – hardly ever advocated as such. However, it does come out in the argument that the interests of future generations can be taken account of today only insofar as the present generation is not harmed (intertemporal pareto-improvements). This “win-win” concept may suit innovations, because the accumulation of technological and organizational knowledge may compensate future generations for the diminished resources that will be at their disposition. The obvious problem with this position is, however, that as soon as the margins for pareto-improvements close in and an actual trade-off situation and hence a grave ethical conflict arises, conclusions become impossible. Therefore, employing an intertemporal pareto criterion can only be a first, largely ethics-abstinent step towards answering the questions we are concerned with. Are intertemporal paretoimprovements not possible in a particular case, one must look for justifications for the trade-offs (balances) between different options. The question whether issues of intergenerational distribution – which are pertinent to the debate on sustainability – offer any leeway for pareto-improvements, as in the case of the sustainable energy innovations discussed in this paper, or if we face a trade-off situation at least in some areas, is of course an empirical one, which has to be answered for every individual case. However, any conception of sustainability introduces some type of intertemporal stock. The demand to conserve it – or the assumption that this would be fair – puts the concept of sustainability into a normative context. Long-term responsibility is a fundamental aspect of the concept of sustainable development, which can be – apart from its form in detail – assumed unproblematic through recourse to a robust, moral intuition. Everybody will accept long-term obligations at least towards the generations immediately subsequent. There will also be an intuitive acceptance of the binding character of this obligation fading with the distance in time (gradation), for one will rather afford one’s children a certain advantage, or spare them some harm, than one’s descendents in the tenth generation. This gradation of the binding character can also be justified by the increasing uncertainty of the occurrence of the desired effects of action. A notion of intergenerational justice is woven into the concept of critical sustainability, in the sense that the standards regarded as critical shall be adhered to. The concept of critical sustainability recurs to issues of gradation, most importantly in terms of the uncertainty of the relevant knowledge, as discussed above. Naturally, we cannot take into account future generations and their needs correctly, since these do not exist yet. For precisely this reason, we often see a distortion of the balance between ecological, social and economic criteria within the concept of sustainability: While the advocates of social and economic aspects rely on special interest groups, ecological aspects are only supported by environmental groups or agencies. The latter consist of members of the generations living today, but acting in favor of the supposed interests of future generations. At this point, science comes into play, for science cannot speak as an advocate for future genera-

6

Summary

tions. It should help, however, to make transparent the risks of overstretching ecological resources, by using the best scientific results available. Therefore, we have to describe risks and future developments with uncertain effects, instead of providing simple “recipes” made up from clear facts.

Towards a sustainable energy system – deficits and points of reference The idea of sustainability as a legal standard is relatively new. It was first taken up in the realms of international law. In the documents that emerged from the “Earth Summit” in Rio de Janeiro in 1992, this notion is found especially in Agenda 21. It was made legally binding, somewhat later, through specific treaties, namely the United Nations Framework Convention on Climate Change, which came into force following its ratification by 160 countries and was concretized in the Kyoto Protocol of 1997. The difference of interests between developed countries and developing countries as well as the diverging ideas about the relative weight of economic and ecologic interests in the industrialized countries have stripped this agreement of most of its effectiveness over recent years. On the European level, since the Amsterdam renegotiations and already in the preamble of the original EU treaty, sustainable development is cited as one of the objectives. In the German constitution (Grundgesetz) (Art. 20a), “protecting the natural foundations of life” is laid down also with regard to the responsibility towards future generations. However, the sustainability of the energy system must not be analyzed exclusively from the aspect of climate protection. At the foundation of the International Energy Agency (IEA) following the oil crisis of 1973/74, the security of supply (procurement) was the principal consideration. Today, about 50% of the energy demands of the European Union are covered by imports. In geopolitical terms, ca. 45% of the oil imports origin from the Middle East; 40% of the natural gas imports stem from Russia. By 2020 – according to a EU prognosis – the import component will have risen to 70% again; over the same period, we will see a shift to a renewed dependence on the Middle East, where about two thirds of future oil reserves are located and where, as estimated by the IEA, more than 85% of any additional production capacity is likely to be found. Presently, neither the international nor the national legal standards are precise enough to derive direct, operative “sustainability targets” from them. Effective political action, however, requires precisely formulated objectives and the corresponding knowledge on action, both of which can only be developed in dialogue with the sciences. In particular, the sciences have to analyze the present energy systems and to formulate a precise benchmark for a sustainable provision of energy. The cornerstones of this analysis are the assertions that (1) commercial energy consumption has risen by a factor of 5 over the last 50 years, (2) more than 90% of this energy stems from fossil resources and (3) differences between the poorest and the richest countries, concerning the availability of commercial energy, are more than hundredfold. Most prognoses predict that the global energy demand will double or even grow by the factor of four until 2050. In contrast, for reasons of climate protection and supply security the consumption of fossil energy should be cut by half over the same period.

Towards a sustainable energy system – deficits and points of reference

7

Two recepies are usually invoked to close the gap between demand and critical limits: enhancing energy efficiency and decarbonization. The first aims at decoupling the gross domestic product (GDP) from the energy demand, the latter at the substitution of fossil resources by renewable or carbon-free energy sources. The present development of the global energy system shows that both processes are far too slow to stop the growth of CO2 emissions, let alone to reduce them. In other words, the present development of the global energy system is not sustainable, neither with regard to climate protection nor from the perspective of energy supply security, especially if the geographic distribution of the fossil energy resources is taken into account. The essence of the above considerations can be summarized by the following simple calculation: Taking into account the typical growth target of the GDP of 2% for the EU and other industrialized countries, and assuming a target of 2% for the reduction of the CO2 emissions, we need a decrease of the CO2 intensity (CO2 emissions per GDP) of 4% per year. The CO2 intensity is used as a guiding indicator for a sustainable transformation of the energy system. In the following evaluation, the scenario “S450” of the Intergovernmental Panel on Climate Change (IPCC), which appears to be ambitious without being unrealistic, plays a central role. In addition, long-term trends, the need for political stability in the north-south relationship as well as a reduction of the dependence from Middle East oil are also important goals. To underline the last point we mention that at present the largest consumer of oil, the US, imports about 40% of its oil demand. In order to operationalize the sustainability targets, two concepts are introduced: (1) The time of safe practice is based on the idea to characterize societal activities by the (hypothetical) time during which that activity could be carried on until it reached its limits (e.g. because of resource limitations, environmental strain etc.). (2) The inertness of the energy system can be defined as the time needed for a significant change of the system. For the present energy system, such a significant change could result in, for instance, the complete substitution of the present fossil energy supply by renewable energy resources. With the help of these concepts, the aim of sustainability can be defined as follows: (1) A practice (e. g. an energy practice) is sustainable if the time of safe practice is constant or growing (principle of the constant time of safe practice). (2) The time of safe practice must exceed the inertness of the system concerned. Applied to energy, this means that a sustainable energy system has to be supported by two pillars: (1) the efficient use of energy and (2) a growing use of solar and other renewable resources. With the technologies known today, the present standard of living in the EU could be maintained with an energy consumption of 2,000 Watt per person. (The present demand in the industrialized countries amounts to between 4,000 and 10,000 Watt per person). This demand could be met in a sustainable manner, i.e. largely by renewable resources. The 2,000-Watt benchmark forms the basis for our further considerations. We have reasons to assume that there is enough time for such a transition, provided that the process is vigorously initiated now.

8

Summary

Potentials and barriers for a sustainable energy system The potential of innovations in the energy sector presently in development or recently introduced to the market is fundamental for such a transition. Hence, their assessment at different stages of development, or at the early stages of commercial exploitation, is the next step of the investigation towards a sound evaluation of their potential concerning energy efficiency. There have been periods in the past – for instance periods of high energy prices – when the energy efficiency of new appliances improved by at least 5% annually. Now we pose the question if such an improvement can be achieved in the future too. By citing representative examples (energy consumption for residential heating, cars, electricity production and selected industrial processes), we show that the technical means are actually in place for realizing an annual improvement of upwards of 5% in the future. Already today, we are even able to specify precisely the potential for the coming, say, 15 years. An improvement of the energy efficiency of new appliances of, annually, about 5% makes possible to halve, compared to the present situation, the total demand for energy by the year 2050. This calculation takes into account further economic growth and a slow turnover of capital stocks. Such a reduction in the energy demand is a precondition for a decisive growth of the relative contribution of renewable energies. The present contribution of renewable energies in the energy market exceeds the general expectation of 20 years ago by a considerable margin. Wind energy will become commercially viable over the coming years. Photovoltaic energy still has a long way to go before achieving that goal. The wide spectrum of applications of biomass through a variety of technologies will become viable on a timescale somewhere in between. Short-term applications include its burning large power plants and its fermentation in small plants. A plethora of new technologies based on gasification for producing gaseous (for instance for the combined production of heat and electricity) and liquid fuels (e.g. for the transport sector) offer promising prospects. Taking into account the different types of renewable energy sources, we developed different scenarios for meeting at least half of the energy demand by using renewable energy sources. 0. The reference case: Continuing existing trends such as a slow improvement of energy efficiency, a gradual rise in the final-energy demand, an increasing contribution from natural gas, the phasing out of nuclear energy and small contributions from regenerative energy sources I. A scenario involving the energy demand being relatively stable (albeit with a demand shift from heat to electricity) and a supply system based on the – under the condition of limiting the CO2 emissions – cheapest abundant energy sources i.e. biomass and natural gas II. The same demand development, but less use of biomass III. A scenario with a markedly lower energy demand Hydropower still is the predominant renewable source for electricity production at present. For the coming decades, the largest growth is expected in the areas of wind energy and biomass. The prospects for biomass are most favorable, though the

Potentials and barriers for a sustainable energy system

9

70 Solar heat Solar PV

60

Wind energy Hydropower

primary energy use (EJ/year)

50

Biomass Nuclear

40

Natural gas Oil 30 Coal 20

10

0 1998

0

I

II

III

[Fig. 5.5] Overview of the primary energy inputs in the year 2050 for the three images.

surface demand involved will be enormous. Still, even within the densely populated European Union an extension of biomass exploitation sufficient for the biomass intensive scenario above (scenario I) is possible. Photovoltaic energy can only become important in the longer term. It is conceivable for this source to play a major role, but that would require extensive development efforts and cause higher costs. Hence, there are several combinations of energy efficiency improvements and renewable energy sources that can reduce the demand for fossil energy in the European Union by 60 to 80%, compared to the present status, by the year 2050. The developments lined out here will never happen without targeted measures. There are various obstacles to overcome. In many sectors, energy does not represent an important cost factor. This is definitely true for the service and agricultural sectors. Even in residential households, the energy costs are spread over several areas (mobility, heating, electricity etc.). Therefore, the energy costs are often not considered appropriately when making decisions. Furthermore, the positive external effects (e.g. fewer emissions) are not appreciated properly in the market. New technologies reside at the upper end of the learning curve and cannot compete easily with established technologies, which have been optimized over a long period of use. On the other hand, the advantages of mass production are crucial if energy efficiency and renewable energies – especially if one deals with manufactured technologies – are to be competitive against established on-site technologies. In many cases, new technologies have to be compatible with existing plants and comply with existing standards and infrastructures, which again delays market penetration. This applies especially to a capital-intensive sector where „sunk costs“ prevent a rapid turnover of capital. Apart from that, the history of substituting one energy source by another shows that new energy sources must be not just competitive, they also have to offer additional advantages (for instance the “cleanness” of oil compared to coal). The substi-

10

Summary

tution process is never untouched by politics (in every direction), and it strongly depends on the service life of the existing energy infrastructure. However, as soon as new technologies have acquired a critical mass, the substitution accelerates.

The reality of sustainability: Conflicts of aims in the choice of instruments The promotion of “welfare” or the “public weal” is often cited as the purpose of political or ecopolitical action. The meaning of this is, however, often unclear when one deals with concrete measures. The reason is that certain measures appear advantageous in some respect while, at the same, they often imply drawbacks too. Such drawbacks can be the uneven distribution of the costs and benefits of a measure or that the removal of one problem implies the creation of a new one. A well-known example is the magic quadrangle in macroeconomic policy: According to the law of stability and growth, a high level of employment, low inflation, external trade balance and appropriate growth have to be the objectives. In fact, however, policies also aim at a fair distribution. These are five aims of economic policy, with the effect that measures for improving the achievement of one aim can easily compromise the realization of one or several other aims. If, for example, a higher level of employment is achieved, this can create a risk of higher inflation and more imports, and possibly leads to lower achievement concerning two of the aims, namely „low inflation” and “trade balance”. If one aims to achieve a fairer distribution the wage rises, this can lead to less employment and growth. Again, two aims are met less successfully, if one promotes another aim. Hence we are dealing with conflicts of aims. For this study, the conflicts between environmental aims and other ones are of particular importance. Based on the “new microeconomics”, we discuss conflicts rooted in market shortcomings and distribution problems, where employment, competition, trade, finance and development policies are relevant. A reduction of environmental emissions, especially in the energy sector, requires the fall in production and thus either in employment or in wages, if employment levels are to be maintained. If cost increases due to environmental policy measures cause a fall in production volumes on the factory level, the result is the same as that of monopolist action, where the monopolist sets a monopoly price. Thus, such measures can intensify monopoly effects, if they do not consider them properly right from the beginning. A large part of energy emissions stems from (international) transport. (International) trade serves to enable the consumer or enterprises to buy goods at more favorable prices. If transport costs rise for environmental reason, so that the environmental costs are borne by the polluter, this runs against the interests of transporters, importers and receivers of goods. The weakness of environmental policies limited by national or regional boundaries lies in the fact that enterprises can migrate to other regions where they do not have to bear environmental costs. Empirically, this effect may well be minor because international competitiveness was given precedence, often through regulations for exceptional cases. In the absence of such regulations, however, the effect partially leads to a deteriorating of employment levels and subverts the environ-

The reality of sustainability: Conflicts of aims in the choice of instruments

11

mental policy itself, for instance because emissions then come in from less regulated countries. To make the costs of environmental policies efficient, one is looking for ways to employ funds from industrialized countries in developing countries, if a stronger effect can be achieved there. If this leads to a stronger demand for land, for instance to realize reforesting programs within the framework of the Clean Development Mechanism (CDM) agreed in the Kyoto Protocol, it can mean higher rents asked from small tenant farms and higher food prices, which is in obvious conflict with the development aim of reducing poverty. Conflicts of aims, as long as they exist, can forestall political decisions, because individuals, especially politicians and lobbyists, can differ in their judgment of the importance of different aims. In particular, they can differ in their acceptance (or non-acceptance) of the actual existence of a problem or in their assessment of the extent of a problem. It can be very expensive in the long term, when no measures are taken because there is insufficient information even if a relevant problem is indeed very important, or when measures are decided which later turn out to be unnecessary. Consequently, the conflict-laden distribution effects of environmental efficiency gains have to be defused in order to reduce resistance. This can be achieved through innovation-political measures. The promotion of superior technologies – in terms of their environmental effects – can cut the marginal costs of enterprises, increase employment and reduce monopoly prices as well as transport emissions without hampering international trade or causing capital migration. Such technology support takes place at home, not in developing countries. The import of superior technologies only reduces emissions if these technologies become the standard and older technologies disappear from the market. To that extent, the contrasting interests outlined above are absent in the employment of innovation policies. Innovation policies can be used as a complement to other environmental measures. In order to gain approval for measures such as environment taxes and certificates, one can offer innovation incentives softening the effects of the cost distribution. Within the legal framework of the European Union, rules have emerged on what must be considered when economic aims – for instance the free movement of goods and services in the internal market – are put aside in favor of the protection of the environment. The reasons must be compelling and the instruments used must affect the internal markets as little as possible. The rules often require only a temporary intervention or the setting of threshold values (e.g. in the case of subsidies for environmental protection technologies). The European Court of Justice has laid down strict rules concerning the corresponding evidence required. Conflicts with EU competition laws can arise in two respects. State incentives have to be measured against the prohibition of subsidies, which covers all national incentive measures favoring the recipient financially, but, in the view of the European Court, does not affect the rules concerning purchase volumes and compensation duties, which mainly present a financial burden for private-sector energy suppliers and lead only indirectly, if at all, to national revenue losses. Any existing subsidy can be justified on environmental reasons, if it is in accordance with the common framework for state subsidies in the environmental sector. This framework provides special rules for regenerative energies, allowing, in principle, at least tem-

12

Summary

porary subsidies. The polluter-pays principle, which dominates the common subsidies framework too, gives reason for concern. The second source of conflict in terms of competition law exists in the competition rules governing enterprises. Where self-regulation within the private sector, e.g. concerning CO2 reduction or regenerative energies, leads to cooperation between companies and thus affects free competition, this too can be justified, if it is inalienable, on reasons of environmental protection. Insofar as it offers the prospect of similar effects as state support measures or market interventions, such self-regulation can also put in question the necessity of restrictions to the movement of goods.

Strategies to accelerate energy innovations A strategy has to activate the potentials with regard to the 2,000-Watt benchmark without failing at the obstacle of conflicting aims, i.e. the balancing of the three pillars of sustainability. The analysis above allows developing such a strategy with a bundle of measures to promote sustainable energy innovations: 1. We propose a strategy to accelerate sustainable energy innovations through custom-made support measures for different phases of their life cycle within a learning curve model. At the beginning of the life cycle, subsidies should help achieving the cost advantages of the effects of scale by enabling enterprises to move faster along the “learning curve” of cost reductions. In a later phase, measures of self-regulation as negotiated solutions or as unilateral self-commitments of the private sector should lead to a faster penetration of the market. The focus is on energy-efficient technologies at the stage of their market introduction, meaning that pilot projects and demonstration proposals already exist and the technology concerned is now at a stage where an “early adapter” has to be found and industrial production and service structures to be developed through higher quantities. In the majority of cases, these subsidies take the shape

Kper unit

A1

A3 A2 TSt

Ncum [Fig. 7.1] Learning curves for energy-efficient technologies compared to the standard technology (TSt). (Kper unit: Unit costs, Ncum: accumulated production volume)

Strategies to accelerate energy innovations

2.

3.

4. 5.

13

of start-up financing. For it can be shown that, in most cases, the costs of the clean technology do not exceed those of the old technology in the long run (see curves A2 and A3 in the graph below). In the face of energy markets characterized by deregulation and volatile prices, such support is particularly important for regenerative energy sources. The different technologies do not all start from the same situation. Energy production from wind power is much closer to profitability than photovoltaic energy. Energy from biomass could turn out too expensive in the industrialized countries of the northern hemisphere, but not in developing tropical countries. Therefore, the promotion of various technologies must be customized depending on their position on the learning curve and the answer to the question, how soon can they profit from economies of scale. For the decentralized, “manufactured” technology of energy production from regenerative sources, the efficient mass production is the most certain way to compete with “on-site” technologies such as power. For this approach to subsidies, the Dutch model of the “energy list” is referred to specifically. By maintaining a list of technologies eligible for support, which is updated annually, one avoids subsidizing a technology for a longer period than necessary. The experience gained in the Netherlands – experience with overcoming information asymmetries, minimizing free-rider effects and focusing exclusively on technologies that are in fact innovative – have to be taken into consideration. Demand should be further stimulated through state procurement programs. For instance, in the course of regular construction, modernizing and repair measures over the next 5–7 years, one in three new public buildings could have a photovoltaic energy plant installed. The extension of basic research into energy technologies, from nuclear fusion to solar energy, is imperative in order to ensure a continuous flow of new knowledge. This is clearly a task where government action is required. A reduction in the funds made available for such research (6. EU Framework Program for research, technological development and demonstration [2002–2006]) is definitely not the right approach. Beyond that, governments should engage in the areas of appropriate education and infrastructural creation of competence for new energy technologies. The total energy consumption in residential households and in connection with mobility is still rising. There are a number of approaches available to influence the present negligence of consumers concerning energy consumption. The instruments of regulating households as main origin of energy consumption, emissions and waste are far less developed than in the industrial domain (e.g. the IPPC directive stipulating the use of the “best available technology”). Consumers are not only restrained by the lemming effect but also by information deficiencies preventing them from making sound decisions. Therefore, we recommend effective and credible labeling including the “greenpricing” of electricity from regenerative sources. The poor success of previous approaches can be explained by the overflooding of the market with labels, leading to the failure even of official labels to clarify sufficiently the difference between sustainable and non-sustainable product. In some cases, this was a result of industry lobbying, in others it was caused by a lack of practical differentiation criteria.

14

Summary

6. More promising could be to bank on social and organizational innovation in order to accelerate the diffusion of energy innovations in residential households. An example of such innovation is the experiment of supply companies – often partnered by public institutions and enterprises – to position themselves as service providers. Such a step frees them from the pressure to sell more and more energy. Instead, they can offer profitable services for the efficient use of energy. 7. In the transport area, more energy-efficient providers have to build more comfortable and faster logistics or mobility chains, compared to private and commercial motor vehicles. Higher market shares cannot be achieved by improving the individual components, but only by revising the entire transport process. This requires innovative packages, for instance the link-up of rail traffic with car sharing and information services. 8. Still, in this case too, only looking at technology development is not enough. At least equally important is the compatibility with existing infrastructures and processes as well as the integration with the electricity network, both on the local level (for compensating discontinuous resources such as wind) and in the European arena (for instance by channeling hydropower produced in Scandinavia to the South during winter and using photovoltaic energy from Italy in the North, during the summer months). For fuel cells, overcoming the “chicken and egg” problem (no vehicles without hydrogen distribution, no hydrogen market without vehicles) is a crucial precondition for the success of this promising technology. Its true advantages, however, with regard to CO2 intensity will only emerge when hydrogen will be produced from regenerative energy sources. 9. Energy issues must regain the highest political priority. 10. Beyond that, we call for the foundation of an “alliance for sustainable energy innovations” organized as a network.

Political enforceability of sustainable energy innovations This study is not limited to the development of options for action; it also examines their political enforceability. We explicitly look at the interests of different social groups of agents (politicians, consumers, companies, environmental organizations etc.), where we will touch on three aspects in particular: the aims level, the choice of instruments and the strategy for enforcement. Sustainable innovation in the energy sector lead, as a whole, to the long-term growth of social wealth; at the same time, however, it requires transformations in the social aims system as well as reforms that appear less attractive, at least in the short term, to some social groups (including essential parts of the energy industry). Given the interests of the groups of agents, we cannot expect the spontaneous emergence of a broad coalition for action concerning sustainable innovation in the energy sector. Each such group (enterprises, consumers etc.), on the other hand, disposes of a certain scope for action towards sustainable innovation, which they can realize without having to give up their principal interests. If we succeeded in exploiting this scope consistently, we could create a dynamics of reform that could take us beyond the status quo (which is not conducive to sustainability). The question remains, how to initialize and organize this process.

Political enforceability of sustainable energy innovations

15

Concerning the choice of instruments, one has to examine the enforceability of the instrument mix invigorating sustainable innovation in the energy sector at the lowest possible social costs. In the political process, economically efficient instruments stimulating innovation, such as certificate solutions or eco-taxes for environmental protection, have turned out be less than attractive. The instrument mix proposed here has a better chance of enforceability. It calls upon subsidy solutions, self-regulation and information instruments (labels etc.), because these do not imply immediate, perceivable strains on well-organized groups of agents. Hence, in the short term, sustainable innovation policies must make use of the potential of these instruments in particular. Innovation-guided policy will have to face resistance, too, but not as much as allocative policies based on taxes, regulation or certificates. The promotion of sustainability policies requires a clearly defined process for formulating binding targets and for ensuring maximum engagement and the creation of capacities towards a platform, on which groups (even if they support opposite positions) can learn (to improve) co-operation, exchange experiences, report on their learning successes and become an integral part of a global network with a shared vision of the future. New institutions are usually treated with skepticism. In contrast to specialized authorities, from central banks to antitrust regulators, sustainability affects every aspect of life; it cannot be separated from the core of democratic politics. Nevertheless, our analysis has shown that it often suffices to link-up existing institutions in a network, in order to integrate the concept of sustainable development into their particular competences. We therefore propose the foundation of an “alliance for sustainable energy innovations”, which should focus on three objectives: – Increasing the public awareness of the divergence between energy demand and growth limitations and the potential of sustainable energy innovations for „pushing out the boundaries“ if this potential is exploited more urgently, – identifying obstacles (e.g. inefficiencies) to an accelerated realization of sustainable energy innovations and the promotion of new solutions, and – building a database and a center for the transfer of knowledge on sustainable energy innovations, for an easy access to every information on specific energy innovations, partners for co-operations, consultancies etc. The members of such an alliance could be: – Enterprises and industry federations (e.g. producers of solar and “conventional” energy, energy customers), – scientific research institutions, – energy agencies and institutions for technology transfer, and – consulting and service companies with innovative, creative ideas. The more members the network includes, the more valuable will it be for the individual member. Ultimately, the alliance could cultivate contacts beyond Europe, especially with developing countries, where the real struggle for a sustainable energy system is fought.

16

Summary

Responsibility for the “energy hunger” of the developing countries – How can sustainable energy innovations help here? The measures proposed here may be judged on a global scale, but the measures themselves largely focus on the EU. However, we would not meet the criterion of intergenerational justice if we failed to examine to what extent sustainable energy innovations could level recognizable „north-south slopes“. The principal features [characterizing the situation in the southern hemisphere] concern the dearth of competence and infrastructure, the limited commercial supply of energy and the inefficient use of energy sources, especially fire wood. Many modern technologies for energy production from regenerative sources – from wind power, biomass and solar radiation, in particular – ought to be employed in those countries. However, before such technologies can gain practical relevance, competences and infrastructures have to be built. In the sparsely populated rural areas outside the towns, decentralized technologies are often much more useful than centralized provision. In this field, too, far-reaching, targeted measures are necessary. A multitude of international organizations – primarily the World Bank and the Global Environmental Facility (GEF) – endeavor to support sustainable energy systems and innovations in developing countries. The EU, on the other hand, suffers a particularly low profile in this area: Energy does not play a significant role, not even an institutional one. This has to change, and there have already been various good proposals (e.g. the G8 Task Force, whose well thought-out suggested were, unfortunately, rejected). Apart from that, the number of successful examples show that global enterprises play a much more active role in technology sharing, for instance through direct investments (e.g. production plants for wind turbines). Obviously such enterprises would rather be guided by policies than venture on unknown territory independently. Therefore, the EU would have to make the effort of integrating energy issues and energy technologies with her development policies more closely than in the past. In this way, a framework and incentives for more investment in energy innovations and their development by the private sector would emerge. However, development aid, technology transfer etc. will only become effective if the industrialized countries themselves manage successfully to transform their own energy systems. Hence, energy innovations in industrialized countries are a precondition for sustainable energy systems in developing countries. This realization takes us back to the starting point of our analysis: Even if the global dimension of the energy question is indisputable, most energy-relevant decisions are taken on national, communal or even individual levels. Therefore, to promote sustainable energy innovations, we need a long-term, international engagement by all agents on all those levels, from enterprises to nongovernmental organizations, from scientists to national administrations.

1 Problem Definition, Tasks, Procedure and Derivation of Recommendations for Action

1.1 Problem definition The energy debate is full of paradoxes. On the one hand, global energy prognoses and scenarios show a stubborn “upward” trend – a continuous growth of energy consumption, caused by growing economies and populations, appears inevitable, with only the scope and the rate of growth still controversial. The usual pattern in this is stagnation in Europe and rapid growth in the emerging countries (and the US). On the other hand, a further growth in energy consumption increasingly faces limits: The obligation to reduce the “greenhouse gas” CO2, which is almost exclusively caused by energy consumption, is the most prominent example, but by no means the only one. Also, the shift of oil production (back) to the politically unstable Middle East, the volatility of oil prices, the immense investments for the development and production of non-renewable energy sources, which also thwart the development of renewable energy sources, and the limited assimilative capacities of planet earth, e.g. as a receptive medium for pollutants from energy-intensive production, are important arguments. Both in science and in international declarations on principles, the problem of intra- and intergenerational justice (within populations living now and in relation to future generations) arises incessantly, while there appears to be no reason to believe this aspect to be of any particular influence on energy-political decisions taken by governments, businesses or even consumers. Only about 10–15% of the German population have ever heard of the term “sustainable development”, a concept aiming to bring together economic, ecological and social criteria for decisions in all areas, thus bringing issues of justice within and between “north and south” and between present and future generations into the discussion. Looking for ways to deal with these problems in a meaningful manner, one sees the “principle of hope” at work, mostly the hope of “innovations” opening up new sources of energy and supposedly revolutionizing the efficiency of energy usage. The concept, or rather, the hope associated with innovation becomes the “dummy variable” between the various predictions and discernible restrictions.

1.2 Tasks of the working group It was against this background that the interdisciplinary working group established by the european academy faced the task of systematically examining the question: what is the true potential of innovations in the energy sector and is the sustainable

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development we strive for really achievable through them? In regional terms, we proceed, foremost, from the situation in the countries of the European Union, without neglecting the wider perspective and the repercussions especially for the developing countries. The question demanded a clear focus on the intersection of the three central issues: Energy, innovation and sustainable development. On each of these subjects, there exist whole libraries of all kinds of studies; the number of possible “side tracks” ahead of the group was virtually boundless. While the importance of energy consumption for all areas of life may be undisputed in principle, it is impossible to investigate every facet and distant effect. This applies, in a similar way, to the subject of “innovation”, which has been a long-running theme in the discussion of economic theory from as early as Schumpeter (1911). The concept of sustainability, on the other hand, has become a fashionable, political term only recently, though it is already the subject of countless controversies. Everybody lays claim to it, or tries to exclude others from it. Hence, our intention was not to embark on a comprehensive treatment of the three subject fields; neither could many of the debates in this context be pursued beyond the point where they ceased to be instrumental in developing the strategy proposed by this study. Among the first tasks was, therefore, the establishment of theoretical connections between energy, innovations and sustainable development, based on a precise formation of terms and concepts, and thereby to define the exact focus of the investigation from there. Differentiation was called for, to make the investigation manageable. The concept of sustainability, for instance, involves not only ecology and economy, but also a social dimension, which is addressed here by dealing with issues of employment, aspects of development politics and questions concerning the security of procurement1. Eventually, however, the social dimension touches every area of personal and communal life: The individualization of society leads to a further increase in the number of single-occupant households and hence in the energy consumption per capita. The public promotion of owner-occupied home building as well as policies concerning road building and traffic have an effect on energy consumption. Every attempt to make such long-term effects of energy innovations part of the scope of this study, to analyze and assess them, would be inviting failure not only due to limited resources and time restrictions, but also because many developments are simply unforeseeable – a point we will support with arguments at a later stage. The social dimension of sustainability represents a boundary condition for the options for action dealt with in this study, in the sense that any energy scenario that puts into question basic elements of our political, economic, social and cultural development models appears unacceptable. However, this does not exclude the question of individual as well as institutional responsibility for the further development of this wealth-generating model under the various restrictions in a world that is more crowded, with a human population of ca. 10 bil. by the year 2050, and an immense backlog in the third world countries.

1

“Security of procurement” (‘Beschaffungssicherheit’) should replace the term “security of supply” (‘Versorgungssicherheit’), which marked a certain position in the energy discussion of the past.

1.3 Deriving recommendations for action

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The “Archimedean point” of most expert reports is the question: what are the ends that should be pursued? From there, recommendations are developed for how to achieve these ends. The working group followed another route: It examined the international and EU legal standards, from which the postulate of sustainability and, accordingly, the course to be set for energy policies can be derived. It is a matter of political standards set by institutions that are legitimized to do so, not of “scienceimmanent” definitions. It is difficult, though, to derive operational ends of action from such standards, which are not specific in terms of quantities. Hence, out of the numerous energy scenarios prepared by various organizations, a middling scenario cited by the World Energy Council (WEC) and the IIASA (International Institute for Applied Systems Analysis) was chosen as a reference point or benchmark, which was then combined with a “moderate scenario” from the IPCC (Intergovernmental Panel on Climate Change). This scenario was compared to an estimation of the potential of innovations in the areas of energy efficiency and renewable energy sources, with all the uncertainties immanent to such calculations. Nevertheless, one would have to resort to a number of extreme assumptions in order to avoid the statement that, with the present “business as usual” approach, the sustainability aimed for is missed by a wide margin. Since giving policy recommendations in an advisory function was part of the remit of the working group, we could not stop at merely stating a need for action.

1.3 Deriving recommendations for action The political debate about the environment and the economy certainly does not suffer from a shortage of discussions and investigations concerning the instruments available for energy policy implementation. Still, abstract assessments of instruments are of little help, since they will always look “optimal” under the given assumptions. In the view of the working group, instruments can be assessed only if the objective and the context are clearly defined (which is often difficult enough, because objectives are formulated vaguely, and the context changes frequently). Even under the most favorable conditions for our considerations – having a quantitative reference point for the sustainable consumption of energy – the high degree of complexity2 and the uncertainties in estimating the effects of instruments often lead to a situation where reliable, quantitative assessments of innovation potentials in the energy sector become impossible – especially in view of the, inevitably, distant time horizon of our study (to 2050). For innovations, this “uncertainty” is constitutive as far that they are characterized, in principle, by their open-endedness with regard to results and processes: We do not know what we will know. In the group’s opinion, the lack of quantitative estimates in the recommendations for action is a disadvantage however only to some degree. For the crucial point is whether one succeeds in inducing an accelerated learning and development process in the energy sector through economic and scientific activities on the European level, taking possibilities for innovation beyond the borders of nation states. 2

On a precautionary note, it should be pointed out again that complexity is not just the fashionable word for complicatedness. Complexity is defined as the multitude of possible states of a system.

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Progress so far has been rather sluggish, because of the large, long-term employment of capital required, but also due to mental and institutional barriers especially where energy has been provided through a regulated monopoly. However, changes in areas with such far-reaching effects as those of the energy sector always face conflicts of goals, too. Certainly, there are “win-win” solutions, through which different criteria improve simultaneously, for instance if an innovation reduces both the costs and the environmental strain of energy provision and, at the same time, does not show any negative societal effects. More likely, though, are the cases where conflicts between different goals emerge. Hence it is important to acknowledge such conflicts – and to search for instruments and combinations of instruments that reduce them to the extent that they become politically feasible (for instance by forming a majority coalition of actors in favor of a practical compromise). These are the criteria on which our examination of previous experience and knowledge was based. Especially in the light of current research, we arrived at results, in some cases, that are clearly at variance with the prevalent discussion – e.g. concerning the role of subsidies or voluntary agreements at different phases of the innovation cycle in the energy sector and for specific segments of energy innovation (see chapters 6 and 7). Still, a strategy must set priorities, however necessary it may be not to lose sight of the differentiation and diversity of energy consumption. It seemed a reasonable decision, therefore, to assume strategic priorities where both the energy consumption is particularly high and the potential for improvement is greatest. This brings energy-intensive processes in industry and households into focus, as well as energyintensive products and – especially in view of the great potential of the EU in general and Germany’s responsibility as the second largest export nation, in particular – the accelerated development of regenerative energy sources. The central question was always: How can existing potentials for innovation be transformed into the widely used “state of the art” technology more quickly? One could think of other priorities, another focus or a different structure of the recommendations (e.g. determined by the classic fields of politics). In this respect, our recommendations may (and should) well meet with opposition. Still, we believe that through a cooperation of elites, this strategy will also allow the formation of a majority coalition of actors. For giving recommendations for action was only half of our work. The other half was examining the chances of their implementation.

1.4 Structure of the study Firstly, a sound investigation requires a clearly defined terminological and conceptional framework. The second chapter provides such a framework for the three central concepts of sustainability, energy and innovation. In this, our intention is not to add a few to the, perhaps, more than 200 different definitions of sustainability already existing. As everybody knows, definitions cannot be right or wrong; they can only be adequate or inadequate. For the clarity of our analysis, it is important to distinguish between sustainability as a general guiding idea, which initiates a searching and learning process with a practical intention, and the more concrete

1.4 Structure of the study

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concept of sustainable development. The latter takes into account particular specifications and thereby serves, principally, in this study as an action-guiding concept for identifying the potentials and possibilities for action pointing to a path that might take us closer to the ideal of sustainability. Next, the different concepts, from “weak” to “strong” sustainability, are analyzed. The working group decided to use the concept of “critical sustainability” as the reference criterion, since it is most suitable with regard to the long-term strategy of innovation-based sustainable development. On the one hand, it avoids any dangerous watering down of the idea of sustainability such as the mutual substitutability of any forms of capital, as assumed for (very) weak sustainability; on the other hand, it takes account of the fact that concentrating on only a few, but crucial and, in this sense, critical economic “crash barriers” or “bottlenecks” can yield realistic strategies for sustainable development. The second area to be specified comprises the term energy. From the perspective of science, the role of energy as a non-substitutable key resource for humanity goes back to the fundamental importance of the energy flow within the biosphere. Consequently, the colloquial terms “energy demand” and “energy consumption” describe the human demand for energy of a high quality (“exergy”) and its degradation into energy of a lower quality, respectively. In the area of innovation, we go even a step further. Apart from the terminological specification, we briefly report the status of the scientific discussion about this subject, in order to provide a basis – especially for those readers who are not familiar with the economic discussion – for the later chapters, which are characterized rather by economic issues and where we turn to results of the scientific discussion, most importantly in the recommendations for action. The third chapter deals with basic normative criteria for consideration and decision-making, which, far too often, are introduced into the discussion only implicitly. Consequently, depending on the underlying premises, one can arrive at very different interpretations with regard to the shaping of sustainability. The result is the, at times, confusing debate that can be observed in the present situation. Crucial for anyone’s analysis is the uncertainty of the knowledge base in the areas relevant to the sustainability discussion. However, since environment-related goals (land use, climate change) as well as goals relating to the energy system itself (reliability, openness of options) and the availability of resources (security of procurement) must be considered, a broad set of goals can be formulated, on which decisions are to be based. In the fourth chapter, we examine the deficits and points of reference for a sustainable energy system in the context previously specified through critical sustainability. Our starting point was the body of standards stipulated by international and constitutional law and relating to sustainability, especially climate protection and procurement security. These shall serve, in a concretized form, as reference points for evaluating the global energy system. According to all the relevant prognoses, sustainability is missed, at least on a global scale, not just in terms of critical sustainability but with regard to every concept of sustainability one finds reported. The (global) trend towards deregulation rather aggravates the sustainability issues (which is not an objection against a stronger orientation towards competition in this formerly monopolistic sector but

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only points to the accompanying measures necessary). From the supposed “backstop technologies” – energy from nuclear fusion or fission, respectively – decisive contributions to solving the problem cannot be expected within the period to 2050. Two models of operationalization are developed: The “time of safe practice”, as a criterion for the time available before a new (sustainable) route of development must be achieved, and the reference point of a global mean continuous power consumption of 2,000 watt per person (2,000-Watt benchmark) – also compatible with the moderate IPCC scenario S450 for the sustainable provision of energy, which is based on the intelligent use of energy and on regenerative energy sources, without expecting the citizen to sacrifice any comfort. The technical potentials, which can be exploited for reshaping the energy system, are discussed in chapter 5. Above all, apart from efficiency potentials, the potential of regenerative energy sources deserves mentioning here. These potentials are summarized in some development perspectives that would allow to achieve the formulated goals. In chapter 6 we analyze the conflicts of goals that impede a sustainable provision of energy. Here, the key issues are concerns about employment and competitiveness, unwelcome effects of deregulation and the promotion of innovations, undesirable consequences for development policies and, finally, limits to intervention set by the ‘sovereign’ consumer. Taking account of such conflicts of goals is no less important than knowing the normative rules of balancing stipulated (wisely) by EU legislation. Chapter 7, finally, focuses on the strategy recommendations: How can we close the gap between the “trend”, or “business as usual” approach, and the exemplary reference standard of a global energy system in agreement with an average power consumption of 2000 Watt per person? Having specified precisely the strategic objectives, we focus on four problem constellations: The accelerated market introduction of sustainable energy innovations, the faster diffusion of best available technologies through voluntary agreements, the promotion of not yet marketable regenerative energy sources through a balanced set of measures, and activating the consumer by stimulating a “demand pull” to promote the chances of sustainable energy innovations in the market. Since our mandate was not only to present recommendations for action but also to analyze the chances of their implementation and develop suggestions for increasing the chances of their realization, we propose, in chapter 8, an “Alliance for Sustainable Energy Innovations”. While the focus of the previous chapters was on the situation in the countries of the EU, in chapter 9 we examine the importance of the industrial countries for the developing nations that are now “catching up”. After all, every effort on the European level would be of little use if the large, and growing, majority of deprived people were to copy our current habits of energy consumption. In this area, also, the exclusive reference to the government would fall short of addressing the problem properly, for businesses too can and should assume an active role in technology sharing.

2 Terminological and Conceptional Foundations

2.1 Sustainability and sustainable development 2.1.1 Terminological differentiation Particularly since the early 1980s, the terms “sustainability” and “sustainable development” have been associated with hopes expressed in the discussion about global conditions for a life consistent with human dignity. Hence, these terms carry decidedly positive connotations. Following its original emergence in late medieval forestry in Central Europe, the concept of sustainability was extended from a circumscribed subject area of the lasting cultivation and utilization of forests – first from the perspective of timber economy, exclusively, but since the 19th century increasingly, also in view of the wide-ranging ecological functions of forests (water balance, local and regional climate, species diversity, soil preservation, recreation etc.) – to more and more other spheres. If the extension of the sustainability concept from the regenerative resource, timber, to other renewable resources, such as fish stocks, still seems justifiable through systematic reasoning – and it present only few problems in content –, the publication of the report of the World Commission on Environment and Development (WCED), “Our Common Future” (1987) fundamentally changed the situation. This report extended the criteria of sustainability and sustainable development1 to a world economy and world community, which are interconnected in many ways and characterized, above all, by the fact that they rely only to a small extent on regenerable resources that can be used in a truly sustainable fashion. Instead, exhaustible resources such as coal, mineral oil and natural gas are predominant. These resources cannot be used in a sustainable manner per definitionem, at least in terms of a concept of inventory, since each unit of an energy carrier consumed in a certain place today cannot be used again to the same extent at another place or another time (temporal rivalry in consumption). From that perspective, the two central normative cornerstones of sustainable development in the conception of the World Commission on Environment and Development (Brundtland Commission), i.e. intragenerational justice between the countries of the north and those of the south, and inter1

For the German version of this report, we translated this term as „Dauerhafte Entwicklung“. Later, however, the term „Nachhaltige Entwicklung” gained acceptance, not least because the English term “sustained yield” or “sustainable yield” is itself a translation of the German “Nachhaltiger Ertrag” (Nutzinger/Radke (1995a), p. 16).

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generational justice between people living today and future generations, attain special importance. However, the chances of realizing sustainable development improve as soon as one, reasonably, replaces the static concept of sustainability, which focuses on inventories of resources, by a dynamic concept of sustainability, which is not oriented along (mostly given) stocks of resources but along the possibilities of overusing those stocks. The concept of inventory and the concept of use are “inescapably” coupled only in a static economy devoid of any technical progress. If one further takes into account the phenomenon referred to as innovation, i.e. the successful implementation of new solutions in the production and marketing of goods and services (see chapter 2.3 for more on this subject), the seemingly absurd extension of the concept of sustainability to a global economy relying predominantly on exhaustible energy resources does not look like an utterly hopeless venture anymore: If appropriate innovations succeed in reducing the use of exhaustible resources per unit of power in production and consumption, so that the use-up rate of such limited stocks can be lower in the future, then the possibilities of using these resources can be maintained and sometimes even enhanced despite the diminishing inventory of resources. Yet of course one has to consider that sustainability is a complex and challenging concept, which is not open to simple technical solutions. For instance, we cannot overcome the scarcity of exhaustible resources simply by transforming the entire planet into a plantation for regenerative raw materials. Still, even if innovations cannot augment, or just keep constant, the physical stocks of exhaustible resources, innovations may well increase the value of existing inventories for present and future generations. Thus, the otherwise impenetrable conflict arising from the rivalry in the consumption of such resources becomes “solvable”, at least in principle, in the sense that there can be meaningful possibilities of use, on which all concerned parties can achieve consensus. Nevertheless, considering the current trends in the areas of energy consumption, environmental degradation, private consumption and population development, the possibility of such consensual ways of using resources does not mean that we can really find a course of sustainable development that meets the many competing demands to an equal extent. This study, therefore, attempts to determine the chances of such a course of development in a reasonably realistic manner. In doing this, we cannot and must not leave out necessary changes in long-term trends. At first, however, we are going to draw the distinction between sustainability as a general regulative idea, and sustainable development as a possible practical application of this idea. This distinction aims at a pragmatic determination of possibilities for action, not at a collection of recipes for concrete measures, starting from the existing boundary conditions and the foreseeable developments (see chapters 7 and 8 for details). 2.1.2 Sustainability and sustainable development The scientific discussion around five experts’ reports on “basic regulatory issues of a sustainable policy” (Gerken 1996) prepared for the German Federal Ministry of Economics shows in an exemplay way how difficult it is to concretize the concept

2.1 Sustainability and sustainable development

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of sustainability without either specifying it in its contents to such a degree that the necessary “future open choice” is affected, or leaving it so imprecise in its substance that the concept is rendered useless even as a reasonable heuristic for the necessary search for sustainable courses of development and degenerates into a mere catchword. In the following, the concept of sustainability is interpreted as a general guiding concept, which initiates and accompanies, with a practical intention, a search and learning process, whereas the more concrete concept of sustainable development is regarded, in principle, as a guide for action. This is not supposed to be a definitive or even generally binding definition of sustainable development; it is rather intended to determine a course that takes us as far as possible towards the idea of sustainability. 1. Sustainability as a guiding concept – in common with other guiding concepts such as freedom or justice – comprises both a descriptive and an explicit, a priori normative component. In its more general form, though, it is more appropriate for pointing out forms of managing the economy that work against sustainability; it is less suitable for identifying measures that would promote sustainability. However, if “sustainable” or “lasting” development is the issue, as it was for the World Commission on Environment and Development (WCED 1987), more concrete stipulations need to be drafted. Hence, a development guided by the concept of sustainability must comprise more than a general heuristic. As a matter of fact, the “Brundtland Commission” itself was eager to point out that, taking into account technical progress, which is of analog importance here as are innovations concerning products and processes, as well as aspects of justice between the countries of the north and those of the south, as well as between present and future generations, it views such lines of development as realistic possibilities. Understandably, the Commission did not embark on detailed descriptions in content and, instead, confined itself to referring repeatedly to the equally justified claims of all human beings – wherever and whenever they may live – to a life in accordance with human dignity. 2. Inversely, when warning about “political preconditions” that are too concrete, the risks involved with an unlimited variety of interpretations of the term “sustainability” must not be underestimated either: On the one hand, even an intellectual search process requires sufficiently clear ideas to guide the search. On the other, there is the serious danger that the conceptual vagueness of the fundamental guiding concept conceals necessary conflicts and balancing acts and feigns substantial agreement where conflicting interests have still to be settled.2 This does not do justice to the actual problem situation. Even if sustainability as a guiding concept can never be defined conclusively – the same is true for the concept of health called upon by Homann (1996, p. 38) in his critique of the concept of sustainability –, the intuitions associated with these concepts by no means exclude certain specifications, especially negative ones; they may even require them in some cases. The guiding concept of sustainability does in fact also serve 2

This last risk affects parts of the report of the World Commission on Environment and Development (WCED 1987).

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to exclude, already on the heuristic level, certain developments, processes and measures in obvious contradiction to this concept, which initiate or discernibly favor policies resulting in the lasting destruction of nature.3 Still, further concretizations, e.g. the setting of certain targets, must be added, if specific measures with regard to a desired sustainable development are to be derived from the general concept of sustainability. 3. The current discussion on climate shows signs of avoiding such hazards by defining certain maximum boundary conditions or “crash barriers”. This becomes particularly clear in the assumption on which the IPCC scenarios are based and according to which the rise in the mean global temperature should be limited to 0.1° C per decade.4 Against this, one could argue that planet earth could also “handle” more rapid climate changes. However, even if one accepts (provisionally) this precondition of limiting the speed of climate change, there is a further need for discussion – which has not been met consensually so far – about the consequences of greenhouse-relevant emissions for global mean temperatures. Further research and discussion are required here, but there we face the problem that we may know with certainty “only at the end of a decades-long process of searching, learning and experiencing” that, in a condition of incomplete information, we have brought about a situation where irreversible, countersustainable climate changes have occurred. Thus, the guiding concept of sustainability demands not only a process of social discussion, but also the readiness, in a situation of insufficient knowledge, to take appropriate action (e.g. a reduction of greenhouse gases) to prevent situations that might ex post prove to work against sustainability – if it can be shown through balancing processes that the prevention strategies are proportional (see chapter 3). 4. Nevertheless, the fact remains that sustainability, as a guiding concept, is better suited to exclude actions working against and endangering sustainability than to produce policy recommendations that are sufficiently concrete. Therefore it is not enough to regard sustainability as a mere guiding concept. It is reasonable to distinguish between sustainability and sustainable development in two stages by first defining the meaning of the general guiding concept before further inquiring which identifiable trends (most notably in the provision and use of energy, and in the innovations sector) will ensure an obvious failure to deliver this guiding concept. The two-stage nature of this formation of concepts meets the requirement of openness for a general guiding concept of sustainability and allows for the definition in content of a workable sustainable development, which further characterizes a course of development guided by the idea of sustainability. 5. In this sense, sustainable development, in contrast to sustainability, is an explicitly constitutive concept. If we take seriously the objective of sustainable development as a concept guiding our actions, we have to agree on the course to be set and the orientations required so that we do not fall short of the guiding concept 3 4

The importance of always keeping in mind the dual character of sustainability as a descriptive and, at the same time, normative characterization is obvious here. This assumption of the IPCC is based on the available knowledge about the speed of natural, geological climate changes.

2.1 Sustainability and sustainable development

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of sustainability. From this, very specific recommendations for action can result, especially for the provision and use of energy and for the process of innovation, which are guided primarily by recognizable bottlenecks for future developments. 2.1.3 Different concepts of sustainability Considering the multitude of efforts to define “sustainable development” – by now, there are more than 200 of them after fifteen years of scientific and political discussions –, one cannot but admit that this concept is still very vague or, at times, even mired in confusion.5 In the present discussion of the problems surrounding sustainability, a first approach leads to the observation of three different ways of dealing with the varied meanings of “sustainable development”: Apart from sheer disapproval (because of the supposed “wooliness” of the concept) and an all-embracing strategy (burdening the concept with everything that happens to suit one’s purposes), there is another possible attitude, which is shared by the working group: the effort to deal with the concept in a productive manner and to define it as precisely as possible according to scientific criteria. This involves comparing various possible definitions of the concept and asking: What are the concrete conclusions in each case, with regard to the research question central to our study? This path is taken in neoclassical environmental economics and, above all, by ecological economics, the “science of sustainability” (Costanza 1991). One has to find a balance between overdetermination and underdetermination of this concept; one should neither burden it with specific requirements which meet the most stringent ecological criteria, but make it an unachievable ideal, nor should one leave it so vague that it can mean everything and effect nothing: In principle, the concept must be operational. In the following, we shall introduce some productive definitions of this concept of sustainability, and discuss them briefly. Whichever definition of sustainable development one considers, they all share, basically, a normative orientation towards a principle (however defined in detail) of intergenerational justice: A development is sustainable, in the words of the Brundtland Commission (WCED 1987, p. 46), if it meets the needs of the present without compromising the ability of future generations to meet their own needs. This is, typically, the central quote used in the “saturated” world, whereas the very next sentence in the report tends to be forgotten: It contains within it two key concepts: the concept of “needs”, in particular the essential needs of the world’s poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs.

The principle of intragenerational fairness, as the second normative element of sustainable development, is closely related. This connection is inevitable, both from the ethical-philosophical perspective and from the practical point of view. From the ethical perspective, one could say that human beings, who feel responsible for the 5

A survey of the spectrum of definitions can be found in Enquête Commission (1998) and Kopfmüller et al. 2001.

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well-being of their descendants, should feel at least equally responsible for their contemporaries’ well-being (see e.g. Daly and Cobb 1989). The discussion within economics – in neoclassical resource economics as well as in ecological economics – focuses on issues of intergenerational distribution. For a long time, the economy of resources reduced the problem to a mere optimization calculus without properly taking into account the problem of justice. It is thanks to ecological economy that the questions of justice, which are implicit for instance in the routine discounting of future benefits and costs, have been pointed out explicitly. As we cannot deal with the various positions concerning intergenerational justice in any detail in this report (see Turner, Doktor und Adger 1994, p. 267, on this subject), we only note briefly that the acknowledgment of obligations of the present generations to those in the future represents a normative decision on principle, for which there is no binding, definitive reason, even if there are many plausible arguments in its favor (see chapter 3). Many economists have tried to define the meaning of sustainability in terms of intergenerational justice by the requirement that a constant capital stock has to be passed on to later generations, where this capital stock consists, in first differentiation, of man-made, material capital, on the one hand, and “natural capital”, on the other. This not only raises further problems of definition, such as the question as to what exactly natural capital is supposed to be and how it is supposed to be measured,6 but also leads, foremost, to the controversial question of how those different types of capital relate to each other. Are there any substitutive or complementary relationships between material capital and natural capital? Starting from this very question, one distinguishes today between at least five concepts, described by the terms very weak sustainability, weak or critical sustainability, and strong and very strong sustainability: Very weak sustainability is discussed in at least two different forms. The weakest form only requires that the annual gross national product (GNP) – i.e. the valued, periodic utilization rate of a not necessarily constant, aggregated capital – should not decrease over time. We could call this form “extremely weak sustainability”. The second form, sometimes referred to as “very weak” in the literature, sometimes as “weak sustainability”, stipulates that the value of the total aggregate capital shall be constant over time, assuming a perfect mutual substitutability between material and natural capitals. Pearce und Atkinson (1993) proposed an indicator for measuring this (very) weak sustainability, according to which a country is on a (very weak or weak) sustainable development path if the savings are larger than the total depreciation of both material and natural capital. Empirical studies show that numerous countries do not even meet this criterion of very weak sustainability (Pearce & Atkinson 1993, Atkinson et al. 1997). Ultimately, this (very) weak sustainability goes back to neoclassical resource economics, to the model of Robert Solow (1974), in particular, and its extension by John Hartwick (1977). Justified doubts about the “sustainability” of such a weak indicator have been voiced by, among others, Faucheux et al. (1997). 6

In contrast to material capital, the measurement and valuation of natural (including human) capital is still in its beginnings. The World Bank, among others, is increasingly engaged in collecting appropriate data (see World Bank 1995, 1996).

2.1 Sustainability and sustainable development

29

The advocates of a weak sustainability, or rather a critical sustainability or quasi-sustainability (for instance the “London School” around David Pearce, or Nutzinger/Radke 1995b) argue that (very) weak sustainability overlooks the fact that natural and material capitals are not completely but only partly substitutable. Hence they introduce the concept of a critical natural capital, which marks limits of substitutability and takes account of the fact that the elements of the natural capital are not only input for the economic process but, to a certain degree, prerequisite for human life and hence for economic activity as such. In this view, certain “keystone species” or “keystone processes” are indispensable for human survival and, therefore, cannot be replaced by man-made material capital. Hence, this concept of weak sustainability (i.e. critical sustainability) demands that limits, “safe minimum standards” or a precautionary principle are set, by which any allowable economic consideration must be confined (see chapter 3). Safe minimum standards, like “crash barriers” (WBGU 1996), load capacities and critical stocks (Endres/Radke 1998), so prominent in the discussion about sustainable development, are in fact environmental standards (Streffer et al. 2000). Environmental standards are set in view of a specific purpose; they are not just determined through scientific research. However, results of scientific research always play a role in the process of setting environmental standards. When studying for instance the possibility that the Gulf Stream might “stop flowing”, one can use a simulation model to determine under which conditions this could occur. Assuming the preservation of the Gulf Stream is desired, the model computation (which must be subject to debate itself, with regard to its method) presents the basis for formulating values that shall serve as crash barriers limiting the relevant actions. In this example, preserving the Gulf Stream is the environmental quality goal, which serves as guidance for setting environmental standards. Notwithstanding this setting of limits, the concept of critical sustainability allows for degradations of natural capital exceeding the safe minimum standard, as long as these are balanced by the growth of other forms of capital. To this extent, critical and weak sustainability are indeed overlapping. From the perspective of strong sustainability, on the other hand, such balancing would not be tolerated. Due to the high uncertainty of the available knowledge concerning the intricacies of ecological systems, about the irreversibility of interventions in ecosystems and the adequate assessment of natural capital, which is not entirely possible, this capital should remain constant on a scale of physical indicators. In practice, the demarcation between weak (or, as we call it, critical) and strong sustainability is difficult, as Turner et al. (1994) have pointed out, for the requirement of a “constant” natural capital may also be derivable from the requirement that “safe minimum standards” are indeed safe. Finally, the concept of very strong sustainability calls for the limitation of the total scale of economic activity as part of the ecological system. Here the throughput of matter and energy is required to be minimized, not least in view of thermodynamic implications, most notably the law of entropy (see chapter 2.2). Still, it appears hardly possible to translate such abstract physical rules of minimization into concrete suggestions for action. A more practical approach, in the view of the working group, would be to extract from the scientific analysis concrete “safe minimum standards”, which would have

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to be observed in the future development of economies. Indirectly, one of the goals of strong sustainability, i.e. limiting the anthropogenic increase in entropy, would be pursued, too, by adopting critical sustainability.7 All types of sustainability presented here, from extremely weak to very strong sustainability, imply a certain form of intergenerational fairness, namely the bequeathing of a certain natural potential to the following generations. They differ in what this inventory is composed of, basically with regard to the underlying assumptions about substitutability or complementarity of man-made and natural capital in each case: Is it merely a constant gross national product (GNP) (extremely weak sustainability), is it an overall constant but randomly combined inventory of natural and material capital (weak sustainability), is it a minimum of (“critical”) natural capital (critical sustainability), or is it a constant natural capital (strong sustainability) which must be maintained and passed on to the next generation? Having such an abundant choice of definitions, why do we call upon a concept of critical sustainability for the following discussion? The answer is: Considering our goal, which is a long-term strategy of innovation-supported sustainable development, the concept of critical sustainability is most appropriate because, on the one hand, it avoids dangerous dilutions of the idea of sustainability – such as, e.g. for (very) weak sustainability, the random, mutual substitutability of different forms of capital –, and, on the other hand, it takes into account that realistic strategies for sustainable developments can only be achieved by focusing on a few, but decisive and in this sence critical “crash barriers” or “bottlenecks” which have to be observed in economic activity. Hence, we are neither looking for paths of development that are realistic but discernibly countersustainable, nor do we seek paths that would fulfill the highest ecological aspirations while discernibly lacking any chance of prevailing. Furthermore, the link between the two concepts, sustainability and innovation, clearly points to the central idea of this study, according to which humans, through their capacity for innovation, can indeed replace natural capital by material capital, within the critical boundaries mentioned above – an assumption that the history of mankind has confirmed in many ways.

2.2 Sustainability and energy In our view, another fundamental concept apart from sustainability plays a central role: the concept of energy. Why did we choose energy, in particular, as a crucial subject area for sustainability? In reality, our society depends on a large number of other nonrenewable resources presently not used in a sustainable way, at least from a long-term perspective. These include all natural minerals, but also water, air, soil and the diversity of species inhabiting the biosphere. Beyond that, immaterial assets, especially the knowledge gathered in the course of millennia, and the organizational forms of living in societies or, in a word, human culture is an important factor for sustainability. 7

Other efforts of concretization discussed in the context of sustainability are the so-called management or utilization rules (going back to Daly; also see Nutzinger/Radke 1995b) and the ecological set of ends, E(lements of the biosphere)-S(elfregulation potential)-H(omeostasis), see Hampicke 1992, p. 314-322.

2.2 Sustainability and energy

31

Confining ourselves to material goods, we conclude that in many respects there are no limits to human inventiveness; but there are boundary conditions, which must be regarded as an unavoidable given for innovations too. In the following, we will briefly illustrate that energy – the energy flow, more precisely – is one of these basic conditions. This finding justifies the choice of energy as a central subject area for our project. A society does not survive if it neglects the creation of a sustainable energy base, as in the history of humankind only such cultures have survived which succeeded in organizing their energy supply in a sustainable way. 2.2.1 The laws of thermodynamics and the concept of energy Energy may dominate our everyday life and constitute an important production factor in economic theory; from the physics point of view, however, it is a rather abstract entity, which can only be defined accurately in terms of a differentiated mathematical model. Historically, the concept of energy was initially defined simply as the “potential to perform work”. In that sense, of course, energy is not conserved; this is why the notion of “energy consumption” has become common usage. The connection between the, at first, entirely different concepts of “energy” and “heat” was clarified only in the 19th century, with the formulation of the first law of thermodynamics stating that energy is preserved, i.e. it is neither created nor destroyed, but just transformed from one form into another. (At the beginning of the 20th century, the concept of energy was extended by Einstein in his theory of special relativity, which includes mass as a form of energy.) Hence, energy consumption actually means energy degradation i.e. transforming valuable or available energy (exergy) into lower-value or non-available energy (anergy). The boundary between exergy and anergy is not absolute, but depends on the system considered. For instance, water at a temperature of 20 degrees Celsius in an environment at zero degrees contains usable energy (exergy), while this would not be the case at an ambient temperature of 20 degrees. The common physical units of energy and energy flows are defined in box 2.1.

BOX 2.1: Energy and power: joules and watts The amount of energy is measured in joules (J) or kilowatt-hours (kWh). The energy flow [or flux] per unit of time is called power, with the unit 1 watt (W). 1 watt is defined as 1 joule per second. Kilowatt-hours per day or per year are also in use as units of power. The same units are used for all forms of energy (fuels, electricity etc.). 2000 watts continuous power (during 24 hours per day) is equivalent to: – 2000 joules per second, or – 48 kilowatt-hours per day, or – 17,500 kilowatt-hours per year, or – 1,700 liters of fuel oil or gasoline per year.

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The biosphere and, hence, human existence is governed not by the first but by the second law of thermodynamics, also referred to as the entropy law, which is about the convertibility of different forms of energy: Energy of a certain quality can be converted completely into an energy form of lower quality. The reverse process, though, is only possible in part, i.e. with a finite efficiency. The maximum thermodynamic rate of conversion is the Carnot efficiency. This maximum efficiency explains for example limits on the production of electricity (high-quality energy) from heat (lower-quality energy) in thermal power plants, or the physical boundary conditions for the operation of heat pumps. If the second law did not exclude it, the total energy requirements of humankind could be met e.g. by reducing the temperature of the oceans very slightly. 2.2.2 Energy systems in the biosphere and anthroposphere Living creatures are structures of a high molecular complexity or order. As a result of the entropy law, any life needs a continuous flow of degradable energy to maintain this order, i.e. to defend against chaos. The biosphere draws almost all its energy from solar radiation. As the energy flow from the sun is not available uninterruptedly, life would be impossible without some mechanism for storing energy. The process of photosynthesis converts solar radiation energy into storable chemical energy. The average global rate of photosynthesis in the biosphere is equivalent to a power of 130 TW (1 TW = 1 terawatt = 1012 watt). This is only about 0.1 per mil of the total solar energy flux reaching the earth’s surface (box 2.2). The physiological energy demand of a human being amounts to ca. 10 million joules per day and person, corresponding to an average power intake of ca. 100 watts per person or, globally, a power of 0.6 TW. Since the transition from any trophic level to the next higher one involves losses of typically 90%, humankind BOX 2.2: Global solar and anthropogenic energy flows Per surface area (Watts per m2) Total solar radiation on earth’s surface Global commercial energy use Physiological energy required by humankind (100 Watts per Person) Biological primary production Total (land + sea) Land (reference area excl. Antarctica)

240 0.02

Total (Terawatts) 122,000 12 0.6

0.25 0.44

130 65

2.2 Sustainability and energy

33

would require ten times the above power (6 TWs) from global primary production. In reality, the share is even larger, because humans take in part of their food in the form of meat, i.e. from an even higher trophic level. Beyond his physiological energy demand, man has invented, in the course of history, various methods to set aside part of the huge solar energy flux for other human needs. The development of agriculture represents the most significant pre-industrial innovation. By clearing woodlands, agriculture increases primary production artificially, and raises the share of biological production useful for humans by selecting and cultivating suitable plants. The cultivation, harvesting and utilization of agricultural products required a great deal of mechanical energy (work), which came from man himself, from working animals, or from the use of natural forces (wind and water power). Aside from the mechanical energy required, thermal energy was always needed, too, for preparing food as well as for heating. The demand for heat was met almost exclusively by burning biomass (wood, animal waste, etc.); fossil fuels did not play a role, although in certain places coal had been known for a long time. The term energy system (of a country or earth as a whole) designates the entire structure of the primary energy resources in use and of the infrastructure for their distribution and conversion into final energy, and of the specific demand structure of the so-called energy services (see box 2.3). With regard to the quality of the

BOX 2.3: Energy conversion chain and gray energy (also see chapter 5, fig. 5.1) Energy for human use passes through a conversion chain, which consists of the following links: Primary energy carrier – primary energy – secondary energy – final energy – useful energy – energy service. To illustrate the links of this chain, we have chosen the example: “running an electric locomotive with power from a coal-fired power plant”: Primary energy carrier Coal as a raw material in the ground Primary energy Mined coal Secondary energy Hot steam in a thermal power plant Final energy Electricity Useful energy Force on the drive wheel of the locomotive Energy service Transport of people and goods A country such as Germany imports energy not only as oil, natural gas etc., but also in the form of goods that have been produced using energy. This energy is referred to as gray energy. Conversely, gray energy contained in goods is also exported. Countries with a large service sector and not much heavy industry show a trade deficit in gray energy, which the national energy statistics must take into account. For Switzerland, for instance, the trade deficit in gray energy is estimated to represent 25% of the direct consumption of primary energy.

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energy form, the distinction between the demand for heat or work, respectively, plays a special role, as well as the differentiation between stationary and mobile demand and the function of electricity. Together the supply and demand structures determine the potential for changing an existing energy system. While the preindustrial energy system was based almost exclusively on the use of solar, i.e. renewable and in most cases locally available energy resources, the situation changed fundamentally with industrialization, in two respects: firstly, through the invention of the steam engine and, secondly, through the discovery and utilization of electricity. The steam engine, and other thermic engines that arrived later, allowed for the first time the conversion of thermal energy into work (even if with considerable inefficiencies, in accordance with the second law of thermodynamics). With this, the demand for thermal energy resources grew to such an extent that the utilization of fossil fuels (coal, later mineral oil and finally natural gas) became, and still is, the most important pillar of the industrial energy system (see chapter 4). Energy production from nuclear fission has not changed this situation, despite its nearly fifty-year history; its contribution to global energy has still not reached 3%. In contrast to fossil fuels, the introduction of electricity into the energy system did not add a new source of primary energy (see box 3). Electricity is a form of final energy. Its great significance lies in the fact that it can be produced from various primary energy sources (fossil and nuclear fuels, water, wind, photovoltaic energy and others), it can be transported easily over vast distances and can be used, as an energy form of high quality (exergy), to meet any demand for thermal or mechanical energy. Electricity’s mean global share in energy supply amounts to 20% today, and the trend points upward. Electric power is mostly (60%) produced in thermal power plants fired by fossil fuels (predominantly coal). These power plants are responsible for nearly 30% of the global carbon dioxide emissions into the atmosphere.

2.3 Innovation and sustainability 2.3.1 Basic context Notwithstanding their very different meanings, the concepts of sustainability and innovation have important characteristics in common, which are equally important for our subject matter as are the crucial differences between the two concepts. Both terms, “sustainability” and “innovation”, represent concepts that are often poorly defined but still endowed with positive connotations in most cases. They are often used as actual or supposed “problem solvers” in crises where a possible, immediate course of action is not discernable. Thus, “sustainability” – most notably in the triad of ecological, economic and social sustainability – often serves as the “magic word” that seems to show a way out of the actual or, more important, impending crises caused by human economic activities that over-utilize natural capital both on the input side (natural resources) and on the output side (assimilation capacity of natural systems). Something simi-

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lar can be seen in the use of the concept of innovation, in particular if it is widened beyond the realms of technology and economy, to encompass society as a whole, and becomes “social innovation”; for innovations are characterized by exactly this: They overcome or at least relax previous restrictions by introducing new products and processes. Not every innovation, however, makes a positive contribution to sustainable development. At the outset, innovation is just a source of structural change, social and economic, contributing to economic growth and fluctuations in economic activity. To what extent innovation as a whole promotes employment and/or reduces environmental degradation is not predetermined from the start but depends on the social framework, price ratios or the choice of technology: In principle, it can be shaped. Various theoretical and empirical studies suggest that innovation, on the whole, offers a positive contribution to sustainable development: – The new theory of growth puts the emphasis on increasing returns to scale, i.e. a general growth of the factor productivity (and thus the environmental and resources’ productivity). – The structural change driven by innovation, among other factors, leads to a reduction on environmental strains (“gratis effects”). In the following, we will briefly outline the aspects of innovation research relevant to this study. 2.3.2 The concept and types of innovation The question whether innovation processes can be influenced by policies is, of course, important with regard to our recommendations for action. It can be answered in a meaningful way only if reliable knowledge about the determining factors (innovation determinants) as well as the process phases and the effects of various innovation activities are available. This is illustrated in fig. 2.1. In the following sections, we briefly report the status of the discussion on process/product innovations, including the specific issues concerning the energy sector. Then we will examine / investigate how their success in the market place (market entry, diffusion) could be supported, i.e. which policy alternatives would be effective, which obstacles would have to be removed, or in other words, which institutional innovations are necessary (see also chapters 7 and 8). The concept of innovation in economic theory was crucially influenced by the works of Joseph Schumpeter (1911, 1942). In this tradition, innovation is defined as the implementation of new problem solutions or factor combinations in the market. The decisive criterion is commercial success, which is identifiable, however, only ex post. Innovation must be distinguished from invention, which is a new finding, technological idea or solution that can usually be protected by patents or other intellectual property rights. Not every invention can prevail in the market and thus form the basis for an innovation. An invention is neither a necessary nor a sufficient precondition for innovation, although invention activity clearly has a positive effect on innovation, since the frequency of innovations rises with the frequency of inven-

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Innovation determinants

Innovation effects

Innovation process

Innovation policy Innovations determinants

Innovation process

Innovation effects

Taxes

R&D (Research and Development)

Economic sustainability

Social sustainability

Ecological sustainability

Regulation

Invention

Growth

Distribution

Material/energy flows

Education system

Prototype

Employment

Social safety

Land-use patterns, diversity of species

Competition policy

Market introduction

Price stability

Infrastructure

External trade balance

Fig. 2.1 Innovation process, innovation determinants, innovation effects

tions. Only the diffusion, i.e. the broad distribution of an innovation opens up its economic potential. Diffusion is driven not only by the innovator, but also by imitation which is often accompanied by further improvements. Based on the criterium “significance”, two types of innovation can bedifferentiated: incremental innovation (improvement) and breakthrough (fundamental innovation). Further differentiation is possible (see e.g. Kemp 2000, where three classes of innovation are defined, “incremental innovation”, “radical innovation” and “system innovation”), but each new category brings additional problems of delimitation. “Everyday” innovation activity is dominated by incremental innovations, which have no sweeping effect in the short term but lead continuously and over a longer period of time to far-reaching changes (the car is a good example here). Breakthroughs occur only after long, irregular intervals, but then they effect fundamental upheavals in economy and society. Referring to the subject of the innovation activity, normally two types of innovation are defined: – Process innovation: new production plants/methods/processes, new forms of organization, opening-up of new markets and supply sources. – Product innovation: new functions, qualities, forms/designs of goods and services.

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More recently, the concept of innovation was extended to other aspects of economic and social development beyond this traditional use in economic theory. In summary, two other types of innovation can be identified: – Institutional innovation: changed framework conditions (autonomous central bank, regulation regime, national plans for sustainability etc.), prevailing especially in the international competition of economic and social systems. – Sociocultural innovation: changed values, lifestyles, consuming patterns, (working) time patterns, needs, preferences etc. in a society. All these types of innovation are relevant in the context of sustainability. Similar to this definition, “environmental innovations” are defined as “those techno-economic, institutional and/or social innovations (…) that lead to a qualitative improvement of the environment (…) whether or not these innovations would be advantageous from other, namely economic perspectives, too” (Klemmer et al. 1999, p. 29). All types of innovation usually discussed in the context of environmental protection are included: “end-of-pipe” technologies, process-integrated environmental protection, product-integrated environmental protection and function orientation (Kurz 1996). 2.3.3 The innovation process: Inside the Black Box 1. Phases of the innovation process: In the simplest case, the overall economic innovation process can be subdivided into three phases: Invention

Market introduction

Diffusion

More differentiated approaches distinguish between a larger number of phases (including R&D, prototyping etc.), also taking feedbacks into account. The relevance of different models of the innovation process, with respect to policies in support of innovation, is that they reveal interfaces, and thus transfer problems and possible bottlenecks or barriers, which can be starting points for such support or for innovation-supporting reforms of the political framework. With his pioneering work, “Inside the Black Box”, Rosenberg (1982) initiated the economic analysis of innovation processes (also see Freeman/Soete 1997, Dodgson/Rothwell 1996). Innovation research has produced numerous findings about the determining factors (determinants) of the innovation process. Nevertheless, there remain considerable gaps in the knowledge especially about the relative importance of the different determinants. In the following, we briefly outline the results that are of particular interest for our project, especially those that help to identify obstacles to innovations (in the energy system). 2. Innovation through a “technology push”: Innovation can be “produced” systematically. The most important input factor is expenditure for R&D (manpower, equipment, materials etc.). The higher this input, the higher the output in the form of innovations – albeit only with a certain probability, for innovation involves risk and uncertainty. In a simplifying manner, one can distinguish between basic research and

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applied research. Basic research is not directly oriented to current problems, although it is clearly influenced by them. The perspectives of future economic exploitation are always considered when main research initiatives are endorsed. In this sense, decisions about central projects of basic science are important in setting the course at the early stages of the innovation process. They constitute a certain self-amplifying dynamic in development (e.g. in the utilization of nuclear energy or in biotechnology,), a specific “scientific-industrial complex”. Applied research attempts to apply known principles to new questions. The direction of applied research in enterprises is strongly influenced by economic conditions and expected changes in these conditions, most notably concerning the relative prices of the labor and energy factors. As early as the 1930s, the hypothesis was formulated that changes in the factor price ratios alter the direction of the innovation process (Hicks 1932, Popp 2002). When labor costs, for example, rise consistently faster than capital costs, this induces laborsaving technological progress (rationalization). Innovation efforts are increasingly aimed at the factor showing the (relatively) greatest increase in cost. Accordingly, rising energy prices should induce more innovation activity towards energy savings. This expectation has been confirmed convincingly in the study by Popp (2002), who arrived at the result, for the US, that rising energy prices – even if such rises are determined by environmental taxes or regulation – “encourage the development of new technologies that make pollution control less costly in the long run” (Popp 2002, p. 26). 3. Innovation through “demand pull”: The innovation process is driven, ultimately, by the prospect of (exceptionally high) profits. With free (unrestricted) competition, these profits always are only head-start profits, meaning they will be destroyed by imitators. Such profits can be achieved when existing needs are met in a better way, or when new needs are raised successfully. Hence, innovators react to (previously undiscovered) demands of (potential) customers and – as dynamic entrepreneurs – they also create new demands. Politics can have a crucial influence on the kind and extent of the demand. In the extreme case, government can prohibit new products/processes (or at least delay their licensing) and thus prevent the development of an innovation. The government can support an innovation by – defining the new problem solution (e.g. as “state of the art”) – and thereby accelerating especially its diffusion; – making existing solutions more expensive (e.g. through taxes on fossil fuels) or even prohibiting them (e.g. toxic, persistent chemicals); – acting as a pioneering buyer (lead customer), who is prepared to pay a high price initially (although the product quality may still be patchy), thus creating the conditions for mass production and learning effects. 4. Cost advantages in the innovation process: The innovator creates a new market and gains the chance to shape it substantially (e.g. through setting standards). Especially where high fixed costs are involved, every potential competitor will find it difficult to achieve access to the market (first-mover advantage). The innovator is also the first to profit from learning effects. When companies introduce a new technology, high

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changeover and adaptation costs are incurred initially. These costs fall to the extent to which the company and its workforce learn and implement minor improvements (learning curve; also see the excursus in chapter 7.8.3). Experience, skills and tacit knowledge are accumulated, which also provide protection against quick and simple “copying” (imitation). Falling learning costs and an expanding market volume allow the unit costs to decrease (self-amplifying process). Hence, governments frequently try to support the build-up of “national champions” to compete internationally and make their first-mover advantage benefit the entire national economy (growth and employment effects). Learning curve effects yield a self-amplifying process – larger market volume
falling costs
lower price
larger market volume, etc. –, which strengthens the market position of the innovator, as long as falling unit costs are always passed on through

Box 2.4: Learning curves Learning curves capture the phenomenon, which is well proven empirically (e.g. in the aircraft industry and in electronic chip and computer production), that unit costs decrease with the total number of units produced:8 From everyday experience in the production process, firms learn how production costs can be reduced (learning by doing (Arrow 1962)). Obviously, such potentials cannot be exploited by research alone. The production process itself brings about both minor (incremental) and significant improvements (process innovations). Unit Costs

Production volume (accumulated)

8

Learning curves are usually displayed in a diagram with the total volume produced (sold) assigned to the abscissa, on a logarithmic scale, and the price per unit to the (likewise logarithmic) ordinate. From that representation, a linear relationship between the (accumulated) volumes and the cost can be derived.

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the unit price. This penetration strategy makes it more difficult for potential competitors to access the market. However, this strategy may involve low profits and the innovator will finally cancel it. This increases the chances for newcomers to enter the market, especially if there are “spillover effects” (e.g. through the enticing away of qualified, experienced workers). Otherwise, a permanent monopolization of the market could result. The learning curve does not take into account product improvements emerging from user feedback. However, the increasing quality of a product is at least equally important as a factor for accelerating its diffusion. Among the results of empirical studies on learning curve effects in the energy sector are the following (OECD/IEA 2000b, Williams 1994): – Doubling the (worldwide) sales of photovoltaic modules leads to the price falling by 18 %. – For (Danish) wind turbines, doubling of sales leads to the price of wind energy decreasing by (only) 4 %. Still, the learning effects are markedly greater (18 % EU, 32 % USA) if one considers not the individual plant but the entire process of producing electricity from wind energy (including the selection of locations, maintenance etc.). – The learning rate for the production of electricity from biomass amounts to 15 % per doubling of the production volume. Government measures supporting market introductions, and thereby facilitating the onset of the learning curve dynamics, appear to be well justified because – they have positive external effects (know-how spillover to other sectors, reduced environmental strains); – they compensate for “first-mover advantages”, e.g. market barriers, enjoyed by old technologies and development paths, which were established in some cases through public subsidies and regulations. Government can contribute to the learning costs (i.e. it can instigate “learning investments”) by stimulating the demand of private pioneers (subsidies, regulation) or by presenting itself as a buyer (state procurement purchases). Such policies are aimed at the innovator, in the first instance, but they must also never fail to consider potential newcomers, because otherwise they encourage a lasting monopolization. Supporting policies must be discontinued as soon as a technology is mature and the learning effects achievable (by incentives) become minuscule. 5. “Embodied” and “disembodied” technical change: The diffusion of new problem solutions takes place through new products and facilities that incorporate the new “state of the art” technology (embodied technical change). Major gross investments are required to drive the rapid “modernization” of the capital stock. Therefore, conditions favoring investment must be created (e.g. through investment grants or favorable depreciation rules). In this way, the replacement of obsolete facilities (power plants, vehicles etc.) can have positive environmental effects. Shortening the service life of old facilities is, however, not a general strategy for sustainability, because – new (e.g. automotive) products are not always moreenvironment-friendly; – Reduction of pollution occurring in the utilization phase must be compared to additional pollution during the production and future disposal of facilities.

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A decision on whether a “long-term product” is indeed superior – or what its optimum service life is, economically and ecologically – can only be made on the basis of the overall balance (life cycle assessment, LCA). Hence, it must be examined in each individual case whether accelerating the diffusion through investment incentives really assists a sustainable development. Apart from the “embodied” type of technical change, there is also “disembodied” technical change, which is not linked to physical capital and which concerns, above all, the management and economic organization of the production process (organizational innovation). This includes management techniques, forms of distribution, logistics concepts, innovations in capital markets (e.g. venture capital), car sharing, energy contracting and establishing markets for recycled materials. Such organizational innovations enable efficiency gains that do not require any significant additional expense on resources (for production and disposal). There are no obvious, concrete ways of promoting this type of innovation, but (government) regulations will most likely play a role in this area. 6. Trajectory-dependence of the innovation process: Once the innovation process has moved into a certain direction and proceeds on a technology path (trajectory), any change, like for instance the switch from direct to alternating current, can only be effected at high costs. Along such a trajectory, incremental, continuous improvements take place, which contribute to its further consolidation. Once the trajectory is fixed, changes in market conditions, especially in price ratios, can effect only marginal adjustments, which do not immediately lead to a change of trajectories. In some cases, a change of the technological course only succeeds after a long time, when a new window of opportunity opens. In a “revolutionary” situation (bifurcation point), when the old technology path is left and (two or more) new paths open up, it is crucial which technology is the first to gain a critical mass of advocates/customers. In the case of network effects, (almost) all customers will eventually switch to this technology. At this point, government support for market introduction can develop a considerable effect, either positive or negative. Network effects are at work if the benefit of a product or a service to each consumer rises with the number of consumers. A single telephone is useless; a small telephone network with a few participants is of modest benefit; only if many people own a telephone, does the technology display its full potential. Network effects also occur with technologies in which the net is not immediately recognizable, e.g. with the use of a widespread PC operating system (which ensures compatibility, service and the availability of application software). Decisions on infrastructures and standards agreed by private or public sector institutions (DIN, ISO etc.), as well as regulations, play an important role in the emergence of a (new) technology path. By removing compatibility problems, standardization can contribute to a faster diffusion, though it can also lead to a premature end of the competition between different technical solutions – before the superior variant is clearly discernible. Standards set by the private sector must be judged critically, not least because they emerge from a process that is dominated, as a rule, by large, established companies or associations. Therefore, we are dealing not just with the competition-neutral solution of technical problems, but with organizations asserting their interests: Whoever determines and dominates the standard will have a competitive advantage. It is not always the more efficient technology that prevails (and thereby determines the

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course of innovation for years to come). The most commonly quoted examples of suboptimal solutions that won through and became established (see Fleischmann 2001) include the video cassette recording standard VHS, developed by JVC, over Betamax, by Sony, and the QWERTY typewriter keyboard over the Dvorak keyboard. Innovation policies introduced by governments can actively set the technological course (e.g. nuclear energy, air & space, biotechnology) – and thereby promote expensive mistakes. 7. Regional clusters: Regional concentrations (clusters) of resources and competences, which often emerge as accidents of history, enhance the macroeconomic innovation activity. Such clusters are mainly the result of – geographic proximity, leading to lower communication and mobility costs; – social proximity, favoring informal contacts on many levels and the development of trust. Innovation research tries to explore the conditions for the emergence of clusters, for instance through analyzing successful regions such as Baden-Württemberg, in Germany, or the Po basin in northern Italy. Based on such analysis, innovation policy can attempt to create new clusters. Universities, start-up centers, or the (subsidized) location decision of a pioneering enterprise can serve as the “crystallization point” of a cluster. If (sustainable) innovation policy relies on cluster formation (regions of competence), increasing regional disparities (differentials between centers and the periphery) can lead to effects which are not compatible with sustainable development (e.g. increasing mobility). 8. Cooperation (R&D joint ventures, strategic alliances): The success of innovation processes depends crucially on the cooperation of various agents. This cooperation can be organized in more or less formal arrangements . Cooperations offer important advantages, compared to mere market or hierarchical coordination. Collaborations extend across industrial sectors and can be of regional up to global dimensions. With increasing division of labor, innovation increasingly comes from suppliers, who are given general performance specifications instead of simply a design drawing. They are part of the learning network, which also encourages collaborations of subcontractors (system contracting). In some sectors, the innovations introduced by plant manufacturers (e.g. power plants) are of crucial importance. Ideally, such networks combine the specific advantages of large corporations, on the one hand, and of small and medium-sized enterprises (SME), on the other, in the innovation process. However, issues also arise concerning competition policy, such as buyers’ power and specialization cartels. Again, governments can initiate or invigorate cooperation (e.g. through joint research projects). 9. International links in the innovation process: Due to globalization, innovation becomes ever more dependent on worldwide information concerning successful problem solutions found in other parts of the world, and on the international transfer of such solutions for application in a multitude of markets. Intensive foreigntrade relations produce learning effects, which in turn enhance innovative competence. Different elements of the innovation process are characterized by different degrees of international mobility. Basic knowledge diffuses very quickly, the diffusion of product innovations takes longer, and that of process innovations is even slower; some skills (precision, reliability, engagement) may not be transferable at

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all. Because of the rapid diffusion of basic knowledge, it becomes increasingly difficult for each investor (public or private) to appropriate completely the returns of his investments in education and research (the “appropriability problem”). Concerning developing countries, there have been intensive discussions in the past about the extent to which these countries need special, “adapted technologies”, for instance because they do not have the qualified workforce for running and maintaining complex facilities, or because western technologies would trigger negative employment effects. This debate appears to be dissolving due to the fact that the developing and emerging countries demand the latest technologies. Hence, the aim must be to ensure that the efficiency potential of such facilities is realized under conditions of continuous operation (e.g. through the support of [workforce] qualification measures). 10. National innovation systems: Since the 1980s there have been efforts to describe the factors determining the extent, direction and speed of an innovation in a countryin their context and to refer to them by the term “national innovation system” (NIS). It describes, in a systematic manner, the network of relationships between agents and institutions involved in the production, transfer and utilization of knowledge (see e.g. OECD 1999). Businesses and their ability to innovate are the central element of any NIS. Apart from that, the kind of relationships between the enterprises and between businesses and other institutions (especially government ) are important. This approach, when applied to the comparison between countries, brings national features into the open as relative strengths and weaknesses. The strengths of the German innovation system are in the area of higher-value technologies rather than in top technologies (see BMBF 2000 and ZEW et al. 2000). The international leadership of the German environmental (technology) industry, where mostly higher, but not necessarily top technologies are applied, fits into this general picture. It is characteristic of the German, as well as the Dutch and the Danish NIS that the high population density combined with high levels of prosperity have led to high expectations from the populations concerning the environment. Furthermore, strong trade unions and other political agents have their demands concerning the social compatibility of innovations. After the creation of the Single European Market, though, the importance of the NIS has diminished considerably. While regional characteristics (clusters) remain in place, the European framework is increasingly replacing national patterns (also see appendix 3). 2.3.4 Factors determining innovation activity The extent, direction and speed of innovation activity depend on the macroeconomic and social framework conditions as well as on the reactions and strategies of businesses (see Nill/Petschow/Jahnke 2001). We could list almost any number of such framework conditions. The difficulty is to identify those that crucially influence the innovation process as a whole and its individual phases. On this, economists have arrived at a far-reaching consensus, which is however, not always supported by unambiguous empirical evidence (see Kurz/Graf/Zarth 1989, Becher et al. 1990). The totality of the framework conditions (institutional structures) in a

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country at a given time – which together characterize the extent and type of the innovation activity – is referred to as the “national innovation system” (NIS). By studying the differences and similarities of various NIS one can identify success factors and obstacles and derive policy recommendations. Some important aspects have already been mentioned in the previous sections. Beyond that, the relevant literature emphasizes the following points: – Intellectual property rights (appropriability problem): information, costs, infringements of patent protection (in the international context) – Regulation: economicregulation (barriers to market entry in certain sectors e.g. transport, trades) and social regulation (safety standards, environmental protection, consumer protection, work safety) – Taxation: income tax versus consumer taxes, losses carried forward and back to favor innovators with widely fluctuating incomes, generally low (marginal) income tax rates versus favorable depreciation conditions – Financing/capital markets: bottlenecks in innovation financing (venture capital, seed capital) – Innovation infrastructure: basic research, internet access, technology/start-up centers – Education system/human capital (primary school to university, vocational training system) – Transfer from university to businesses: cooperation, permeability, exchange of personnel – Employees as a source of innovation: forms of participation, working time models – Acceptance issues: technology assessment, forms of communication Each of these keywords stands for a multitude of possible decisions concerning innovation policies. This will be briefly illustrated, using environmental protection as an example. The innovation effects of environmental protection depend primarily on its objectives and on the instruments chosen in order to realize them. Roughly simplified, the innovation effects of instruments of environmental policy can be summarized as follows (see in particular Klemmer 1999, Klemmer et al. 1999, and Zimmermann et al. 1998): – Regulation (“command and control“ approach) slow down the innovation process if a certain “state of the art” technology is rigidly codified (the “conspiracy of silence of the chief engineers“). An exception would be if ambitious standards, which cannot be realized with present technologies, could be credibly codified for a certain time in the future (“technology forcing”, see Ashford 2000). – As a rule, market instruments (liability, taxes, tradable permitts) favor innovations. – With voluntary agreements (self-commitments), the innovation effect most often depends on the degree to which they are binding. As a whole, however, the impact of the instrument mix employed in environmental policy on the macroeconomic innovation process should not be overstated. The “optimization” of the instrument set of environmental policy offers only a limited contribution to driving this process in a sustainable direction. A much wider approach is called for.

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Empirical studies explicitly concerned with the determinants of “sustainable innovation” do not exist. Under the simplistic assumption that environmental innovations are also sustainable, one can fall back on the results of a ZEW study (ZEW et al. 2000): – Regulations are of the greatest importance. The introduction of laws and the expectation of future legislation are the main impetus for environmental innovations. This supports the significance of the “technology forcing” approach. Still, one must note that the effects of such a regulatory approach on other fields of innovation – effects on which there exists only scant research – will more likely be negative. – Cost savings (disposal, energy, materials and labor costs) are another important impetus for environmental innovations. Making energy and materials (and disposing of them) more expensive, e.g. through eco-taxes, should therefore have a noticeable effect on innovation activity. On the other hand, negative effects on innovation activity of a higher tax burden are another likely outcome. – Another important point is the environmental awareness within corporations and in their surroundings (chances of image enhancement), in the sense that a more acute awareness of the environment can be of essential support for environmental innovation. – The hope of opening up new markets plays a rather secondary role. “It appears to be the case that environmentally relevant product characteristics … are suitable for product differentiation, but not as essential product attributes per se“ (ZEW et al. 2000, p. 83). – The lack of reliabilty of the political framework concerning environmental policies, which is also among the reasons for the shortage of amortization possibilities, is probably the most significant obstacle to innovation. This highlights the importance of formulating binding sustainability targets (national sustainability strategy), which serve as an orientation guide and provide a solid basis on which expectations can be formed. These results show that innovations reducing environmental degradation depend not only – and, it is suspected, not crucially – on financial support from government. Factors of regulatory policy (target definition, changes in price ratios, deregulation etc.) are at least equally important. This must be taken into account when formulating a strategy for sustainable innovation in the energy sector. 2.3.5 Sustainable innovation policy In this section we present some general considerations on a strategy of sustainable innovation. First, we ought to clarify whether, and for what reasons, the state should intervene at all in a market economy to support innovation. 1. Arguments for government support of innovation: As a rule, private companies that are active in research and innovation do not manage to appropriate all the returns of their innovation activity.Beyond the profits arising for the companies, innovation also yields social returns (positive external effects, spillover effects). Hence, from a macroeconomic perspective, companies tend to underinvest in R&D. For this reason,

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government intervention in favor of increased R&D or innovation activity enhances efficiency even in a market economy. Innovation support will most likely yield positive external effects if it focuses on basic research; the closer it is to the market (applied research, market introduction subsidies), it will lead to an increase in returns that can be internalized privately, whereas hardly any social returns (beyond the private ones) will remain. The closer innovation policy is to market introduction, the stronger is the selectivity of the support – and the problems with selecting the “right” projects (“picking the winners”) and including SMEs (bias in favor of large corporations) become increasingly severe. Hence, there are generally good economic reasons for the state sponsorship of basic research, while in the case of applied research such support is justified only in individual, concrete instances. This position is put into context by the observation that microeconomic rationality can also lead to overinvestment in R&D (“patent race”, parallel research etc.), and that government support would reinforce such inefficiency. Nonetheless, this objection should be of minor importance with regard to sustainable innovations since, by definition, the positive external effect will be considerable; apart from economic success, social and/or ecological improvements will be achieved (“double dividend”, or even “triple dividend”). But even if one accepts the necessity of government support in principle, the following difficult “details” remain to be clarified: Which innovations (potentials, projects) shall be supported with which instrument, and to what extent? 2. Innovation policy as a competition and regulation reform policy (accommodating policy): If innovation is interpreted as the result of a social search and discovering process, to which a multitude of agents bring their knowledge and the results of which cannot be predicted in any detail, then innovation policy must focus primarily on “examining the institutional preconditions of innovative processes”, meaning “essentially, the policy aims at identifying the restrictions on action that are suffered by the agents in the market and which obstruct, delay or limit a desirable (considering possible negative external effects) innovation process” (Wegner 2001, S 9 f.). At its core, innovation policy is competition policy aiming at the removal of a “dysfunctional regulation density” (restrictions of competition imposed by government) and anti-competitive practices followed by companies, as well as at strengthening the protection of property rights. In addition, innovation policy is to provide “complementary input factors” with public good characteristics. “Providing an efficient infrastructure” (Möschel 1994, p. 42) includes e.g. the education system and basic research. As far as the expenditure itself is well justified in terms of the allocation function of the state, government procurement policy can be used as a complement. “Institutional self-regulation” (Wegner 2001, p. 9) acts as an additional supporting factor: The market participants themselves create new institutions such as technical standards, quality and safety standards, and credit or sustainability ratings systems to assess corporations. In individual cases, government policy can intervene in the formation and development of these institutions, too, in a supporting or regulating form. Innovation policy aiming at inducing or accelerating new technology paths can be justified and successful, especially if two constellations of conditions are in place (Wegner 2001, p. 21 ff.): – It is conceivable that innovation policy is based on a transformation in individual preferences and that, for this reason, it only anticipates the consequences of such change (decline of traditional problem solutions). However, if this is the case, the

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difficulty lies in the problematic assumption that the state would have to recognize the transformation of preferences before the private enterprises notice them. This would mean that innovation policy is the attempt to “offset entrepreneurial competence deficits” (Wegner 2001, p. 11). – Economic policy regulation imposes the abandonment of a technology path (decline of traditional problem solutions); the market agents increase their search efforts (e.g. their R&D expenditure) and are successful in finding a new (sustainable) technology path. The dynamics of innovation are not impeded but redirected, which incurs additional costs in the transition phase. This scenario depends crucially on the (unpredictable) innovation competence of the market agents. Here, too, preferences should be explored in order to suppress, as far as possible, any efforts of avoidance. “Economic policy would fall for a fatal illusion if it were to see the private competence for innovation as a regulatory resource to be exploited at will” (Wegner 2001, p. 22). Hence, innovation policy should be based on as wide-ranging objectives as possible (e.g. increasing energy efficiency) and adjusted, largely, to the preferences of those to whom the benefits are directed (private individuals and companies) (e.g. with regard to the areas of need and the instruments available) (Wegner 2001). 3. Phase-specific innovation policy: Each innovation creates a new market with its typical life cycle (measured in turnover, unit sales etc.) (Heuss 1965): I. Experimental phase: The product is developed until it is ready for the market, to which it is introduced butno unmistakable trend towards expansion is visible yet. The majority of new ideas and inventions do not proceed beyond this stage. II. Expansion phase: The product prevails (exponential growth of market volume). The expansion of production volume is accompanied by falling unit costs, due to fixed-cost degression, learning curve effects and process innovations. Further product improvements and production efficiency gains are driven not least by the market entry of newcomers. Market size

I

II

III

IV

Substitute

Time Fig. 2.2 Market development over the innovation process

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2 Terminological and Conceptional Foundations

III. Gestation phase: With growth rates declining (market saturation) and the innovation potential largely exhausted, the activity of enterprises shifts to product differentiation. Only product-oriented services (function orientation) offer chances for expansion. The entrepreneurs (as defined by Schumpeter) leave the market and open up a new market with another innovation. IV. Stagnation/decline phase: Here we see the destructive effect of the innovation. Innovative substitutes destroy the market of the old champions, who are left to survive in niches. The necessary capacity adjustments are delayed, in many cases, by state (preservation) subsidies, which also hamper, indirectly, the success of the new champions. Phase-specific innovation policy: – At the onset of the expansion phase, government support for market introduction can accelerate the progress of the innovation – both through public grants for pilot and demonstration projects and through innovation-oriented procurement policies or subsidies for private first users. The question as to what instruments are most suitable is discussed in chapter 7. The curve in Fig. 2.2 would become steeper and peak (at the point of market penetration/saturation) further to the left. The peak can also reach a higher market volume – assuming domestic innovators succeed in achieving first-mover advantages (learning curve effects, setting the standard, etc.) and attracting international buyers. – In the expansion phase, as well as in the gestation phase, the innovation becomes self-driven; (further) support from the state is not required. The difficulty is to recognize the right moment for the state to withdraw from its supporting role, and to carry out this withdrawal. – In the phase of stagnation and decline, at the latest, the next innovation should commence its life cycle. To achieve this, enterprises must invest early (already during expansion and gestation) in R&D and prototypes. They do this for reasons of self-interest (using their revenues from the previous successful innovation, which now serves as a “cash cow”), though not always to an extent that would be desirable from the macroeconomic perspective. Government support can provide incentives, which help to ensure that the pressure in the project pipeline remains high, and that competence deficits do not become the limiting factor in the innovation process, which can be prevented especially through application-related school and education policies. 4. Dual strategy: A pragmatic approach to innovation policy combines the reform of the established R&D policy with a wider reform of the framework conditions. – Innovation processes share regularities, and this enables us to derive starting points for economic policy measures. Support for (applied) R&Dand market introduction appears to be justifiable where competition has largely fulfilled its search and discovering function and the socially favorable, accelerated diffusion (reducing negative external effects and strengthening positive externalities) are left as the sole issue. This aspect of innovation policy is calculated to improve the chances of success (diffusion) of specific technologies (exploiting sustainable potentials). If there is an invention available, and if the assessment of its sustainability potentials (technology assessment) is positive, political instruments can

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aid in its development as an innovation, i.e. ensure its wide diffusion. It then remains to be clarified which instruments are most suitable for this purpose. – General improvements of the framework conditions for sustainable innovation activities (e.g. regulation reform, tax reform, basic-research priorities) can help redirecting the innovation-seeking efforts of scientists and inventors. The knowledge and ideas pool within society (the stock of inventions) is enriched with ecology-guided contents and processes, the success of which is advanced by the state. This part of the dual strategy aims at a general increase in sustainable innovation activity, not at sector-specific potentials or certain types of innovation. And if this approach were to achieve a productivity growth in terms of material or surface area, this would be a contribution to a sustainable development, too. This element of the policy is relatively ineffective (in the short to medium term). The two components complement each other. Insofar as the transitions between both types of innovation policy are fluid, any (at times ideological) “either/or” debate is unproductive in this context. The aim of sustainable innovation policy as a whole is to change the framework conditions in such a way that the chances of sustainable innovation potentials prevailing in the market are improved. The second component of the dual strategy for sustainable innovation is clearly hampered by the fact that successes only appear in the longer term, and they cannot be attributed directly to a specific change of the framework conditions. Hence, the political implemention especially of these types of reforms is a difficult endeavor (see chapter 8). The reasons for this are not only of a political/practical nature, however, but are also rooted in the conflicts of goals (see chapter 6) and the basic, normative decision problems discussed in the following chapter.

3 Normative Criteria for Evaluation and Decision-Making

3.1 Risk assessment and recommendations for action 3.1.1 Scientific policy consulting In contrast to political lobbying, which is bound to certain interests, scientific policy consulting aspires to interest-neutrality (or at least to keeping a greater distance from organized interests, however legitimate these are in a pluralist democracy). The other difference is the transparency and systematic approach with which the results are dealt with and, most importantly, the recommendations are derived. These characteristics are called for especially in the case of interdisciplinary research, where the individual paradigms, assumptions or implicit normative prejudgments cannot be identified in a (relatively) unequivocal manner as in the case of, for instance, economics research institutes with their known orientations, where a close correlation between the results of their research and their economic orientation is assumed. The research group considers its work as part of the tradition of interdisciplinary technology assessment, which has proven its worth especially for environmental issues. Institutionalized scientific policy consulting concerning the environment has its origins in the scientific assessment of new technologies (United States Senate 1972, Haas 1975) and in the sociological treatment of the acceptance of large-scale technological projects (Renn 1984). These roots still characterize present efforts in this field, summarized under the label TA (for “technology assessment“; Bullinger 1994, von Westphalen 1997, Bröchler et al. 1999). Over time, the methodical foundations were extended by competences from (applied) ethics and the philosophy of science (Gethmann 1999, Grunwald 2000, Hanekamp 2001). Furthermore, institutionalized forms of TA today take into account the research desiderata of biology and medicine. In the environmental sector, the very wide spectrum of scientific policy consulting is characterized by the challenge of integrating “subglobal” action with an assessment of global effects. Still, a certain confusion of aspects or options to be considered becomes obvious even in such limited contexts. Both developments point to the uncertainty of the knowledge base as, apparently, the central problem. For the energy sector, with which we are concerned here, both aspects are important with regard to sustainable development. The context for changes in the energy sector is a global one – the natural resources, for instance, have to be assessed on a global scale, in most cases, as well as the relevant emissions – but action is usually

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taken on a national or subnational level. The relevant changes in the environment are evaluated by means of models, whose predictive power can be assessed reliably only ex post – but recommendations are needed today. Conscious of this dilemma of environmental policy, the present study assembles the voices of science to enable well-informed decisions with regard to sustainable energy innovations. 3.1.2 Theoretical and practical perspectives Action, in this context, is action under risk, meaning action that tolerates possible, unwelcome side effects. The possibility of such effects always refers to certain knowledge, a certain theory, or a certain model. Thus, the reliability of the relevant knowledge is decisive in risk assessment. However, the side effects looked at in the context of sustainable development are not just effects of a single action, but effects arising from an entanglement of actions and developments. This complication affects the problem of assessment, most notably in its ethical aspects, since it makes it difficult or even impossible to identify a correlation between the effects of action and any specific agent. To assess the risks of climate change, one would have to study the individual elements of climate forecasts in theoretical terms, from the perspective of the philosophy of science. But not even such an investigation could be expected to remove the uncertainty of knowledge in that area: The uncertainty appears to be constitutive in this case.1 The discipline that affords procedures for decisions under uncertainty is referred to as normative decision theory, which deals, in a general way, with comparisons between options for action in view of selecting such options (or the option) through which a certain end is achieved in the best possible way. If a particular state of the environment becomes reality, taking a certain option for action leads to a specific result.2 The various methods of decision theory can be classified according to what knowledge about the occurrence of certain environmental states is available. If the state of the environment is predictable, the decision is called a decision under certainty. If one can only cite probabilities for the incidence of particular environmental states, one deals with a decision under risk. Furthermore, if the possible environmental states are known, but not the probabilities with which they occur, the decision is one under uncertainty. Decision procedures for these three types of decision problems are available. For decisions under uncertainty, there is e.g. the risk-averse minimax rule (minimizing the maximum damage) or the risk-inclined maximax rule (maximizing the maximum benefit or, in this case, minimizing the minimum damage). However, these procedures require that the relevant environmental states, i.e. the range of conditions can be determined. Hence, if the range of conditions cannot be formulated, these procedures are excluded. Robert Goodin (1982, p. 174) has described such situations (which apply 1 2

See also the study of the European Academy: Klimavorhersage und Klimavorsorge (Schröder et al. 2002). In this way, a decision problem can be represented by specifying the options space, the state space and the results space.

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e.g. to climate change) as cases of profound uncertainty, in contrast to the moderate uncertainty referred to above, where environmental conditions are actually known. The profound uncertainty of the underlying scientific problem is therefore an obstacle to the application of the risk-averse minimax rule, although it seems to be indicated, at first sight, because of this very uncertainty. Even the specification of a maximum damage – which would be excluded according to this rule – is in fact uncertain. The epistemological difficulties surrounding the minimax rule do not affect the moral reasons initially tempting us to apply the rule e.g. in the case of climate change. These reasons are essentially the same as those with which John Rawls (1971/1998) supports his suggestion to use the minimax rule as a version of his well-known principles of justice, which are: (a) the moral asymmetry between damage and benefits; (b) especially if the individuals concerned will carry the longterm consequences of decisions under risk; (c) if these risks impinge on the vital interests of the individuals concerned; and, finally, (d) if those individuals did not make the relevant decisions or did not agree with them. When studying the risks of a climate change, we are dealing with a situation where criteria (b) to (d) are all relevant. Hence, we might not have the knowledge sufficient either to apply the minimax rule stringently or to compare costs and benefits precisely. This does not devalue the moral perspective, though, from which the application of this rule was suggested. If we model the decision problem – should energy systems be rebuilt towards sustainability? – as a decision under uncertainty3, with two options (sustainable restructuring or no sustainable restructuring of the energy system)4 and two states of the environment (influencing climate change through restructuring or not), and if we further take into account the possible result that sustainable restructuring has no influence on climate change and, hence, does not prevent possible negative effects, then applying the minimax rule leads to the decision to abandon such a project. The two options are indifferent only if restructuring does not incur any costs. On the other hand, even if restructuring involves positive costs, investigations concerning climate change are necessary only if the central objective of the (re)organization of the energy system is to prevent climate-related damage. The reverse argument reads as follows: By one-sidedly relating sustainable restructuring to climate change only, we burden ourselves with an obligation to give reasons that can hardly be met. However, if such sustainable restructuring of the energy system is still desired, independent of the risk just mentioned, the costs of restructuring have to refer to all relevant criteria. Resource economy and energy economy may contribute further reasons for a sustainable reorganization. Considering the exhaustibility of fossil energy carriers, a reorientation towards regenerative sources of energy appears reasonable. With regard to the security of procurement, becoming independent of socalled crisis regions and taking precautions against the civil or even military risks of nuclear energy may be sensible aspects, too. 3 4

Cf. Hanekamp 2003. In this way, the option space, too, is simplified to a straight yes/no alternative. Yet, it could also be widened, with a continuous “restructuring parameter” as the other extreme.

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The reasons for sustainable restructuring thus specified can be summarized as a set of objectives: Table 3.1 Objectives for a sustainable restructuring of the energy system Objectives

Concretization

Availability of resources

Period of secure practice

Energy system

Reliability (end user), openness of options, risk avoidance

Environment

Climate change, emissions, surface consumption

Whenever in this study we point out the necessity of a sustainable restructuring of the energy system, one has to keep in mind all of the goals cited above. However, for this set of goals, the reduction of CO2 emissions can serve as a “guiding indicator” that is supplemented by further indicators (land use, openness of options etc.) in a particular context. Facing the knowledge deficits discussed above, environmental policy usually calls upon the precautionary principle5, according to which measures are taken as soon as scientific plausibility is given, in the sense of a “potential for concern”. This plausibility condition may be met by a climate change caused by emissions of climate-effective gases. The measures to be taken, however, shall be chosen according to the principle of proportionality (prohibition of excess). Again, there is no point of reference sufficiently precise for a balanced consideration i.e. for the comparison between expected costs and damages incurred by different strategies. The now common form of the precautionary principle, the ALARA principle (“As Low As Reasonably Achievable”) highlights this observation insofar as the assessment of what is “reasonably achievable” is just not possible. Nevertheless, unswerving insistence on the principle of proportionality appears to cancel out the precautionary principle.6 In principle, if we accept a however weak potential for concern, counteraction appears to be advisable. Still, for the reasons mentioned above, it is difficult to determine the kind and extent of such counteraction. Goals related to resource and energy economy are needed to serve as “concretization aids” that allow the determination of the proportionality of the measures in question (see chapter 4). In any case, independent of the weight of the different arguments, the discussion about the restructuring of the energy system requires us to know the medium- and long-term costs and benefits of a sustainable restructuring driven by innovations.

5 6

See Rehbinder 1991; id. 1998, Rdnr 27ff. Bringing forward the precautionary measures is regarded as justified in cases where “severe, possibly irreversible” effects are at issue (Rehbinder 1998).

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3.2 Sustainable development and justice 3.2.1 Introduction Sustainability is a normative idea, without any doubt, and each of the different concepts introduced in chapter 2 involves a specific normative decision of general principle, which in turn involves specific ethical considerations in each case, even if they are not always explicitly mentioned. From our point of view, the position that there are no obligations with regard to future generations is hardly advocated in the somewhat sarcastic question ironically proposed by one of the “Marx Brothers”, Groucho Marx („Why should I care for posterity? What has posterity ever done for me?” 7). But still we found similar views in the German business ethics discussion, for instance, albeit only in the mild form that the interests of future generations are to be considered today only to the extent that the present generation benefits from it as well (Karl Homann). Consequently, limiting the opportunities for activities of the present generation is only admissible if this generation is better off (or at least not worse) in this case than in a situation without such limitations (Homan 1996, p. 42 ff.). The obvious problem with this position is that whenever there is no room left for Pareto improvements8, i.e. in every instance of a true trade-off situation and hence a grave ethical conflict, it gives us no rules or recommendations at all.9 Therefore, applying an intertemporal Pareto criterion can only be a first and ethically largely abstinent step towards answering the questions at hand. If intertemporal Pareto improvements are not (or no longer) possible, one has to look for justifications for the necessary trade-offs (balances) between different options. Whether there are opportunities for Pareto improvements in specific questions of intergenerational distribution inherent in the sustainability discussion, as in the case of sustainable energy innovations discussed in this book, or whether there are, at least in some cases, clear-cut trade-off situations, this can only be answered on an empirical basis in each concrete case. However, any conception of sustainability introduces some type of intertemporal stock. The requirement to conserve it – or the assumption that this would be fair – puts the concept of sustainability into a normative context. In the relevant political documents (e.g. WCED 1987), the sequence of, first, introducing a concept and, second, using it in a normative way is carried out in a single step. Still, a more differentiated consideration is helped by treating the two

7 8

9

Quoted from Vallance (1995, p. 115). Pareto improvements are such improvements by which the situation of an individual member of a society can be enhanced without worsening the situation for any other member of the society. A situation where such improvements are not possible anymore is referred to as a “Pareto optimum“ (Sohmen 1976). As Amartya Sen (1987, p. 35) pointed out: „Despite of its general importance, the ethical content of this welfare economic result is, however, rather modest. The criterion of Pareto optimality is an extremely limited way of assessing social achievement [...].“ In this, Professor Sen refers to the first and second laws of welfare economics, which show the equivalence, under very specific conditions, of the Pareto optimum and a general balance of competition.

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steps of the sequence as two separate entities. The first step was discussed in the previous chapter, where we indicated its implications for the second step. Now we will point out, with regard to the second step, how moral intuition allows us to regard questions of justice as uncontroversial – apart from the details – even in an intergenerational sense. Practically every human being will accept long-term obligations, at least towards the immediately following generations. In a similar way, a decreasing commitment of those obligations with increasing distance in time (gradation) will also find intuitive consent because one will be more inclined to bequeath a certain advantage to his own children (which one normally knows) than to his descendents in the 10th generation (which one cannot even imagine). In addition, this gradation of obligations can be justified by means of the increasing uncertainty about the occurrence of desired impacts of action as time goes by (Gethmann/Kamp 2000). In our notion of critical sustainability, a certain idea of intergenerational justice is implied insofar as the standards which have been deemed critical ought to be maintained. Critical sustainability as a dynamic concept for using resources is involved in issues of gradation, especially with regard to the increasing uncertainty of our specific knowledge in the course of time. With this, the context for the following discussion is outlined completely. Hence there is no need, at this point, for going into the many branches of the philosophical and economic discussion about justice and, especially, for determing how the gradation of commitments could be shaped. 3.2.2 Political Approaches One can say that the principle of intergenerational justice or equity underlies the WCED view of sustainable development, which ‘aims to ensure that economic progress [and we should add, development in general; WA] does not prejudice the chances of future generations by depleting the natural capital stock that sustains human life on the planet. Equity requires that this strategy is followed by all societies, both rich and poor’ (CGG, p. 52).

In other words, the Brundtland view orders two problems of justice: justice between North and South (rich and poor, i.e. intragenerational justice) can and should be pursued but not in a way that harms the pursuit of intergerational justice (Hengel 1998). Thus, intergenerational justice is seen here as a moral constraint on the pursuit of intragenerational justice. The content of the constraint is that generations should have equal opportunities to use at the very least primary natural resources (in a broad sense) or perhaps, adopting a more recent concept, environmental (or ecological) space. As the elementary but very broadly shared moral basis of the strategy of sustainable development one can take the golden rule (Rawls; CGG p. 49): people should (not) treat others as they would (not) themselves wish to be treated. So far the relation between sustainability and justice may seem obvious but also rather stipulative. A more internal relation might strengthen the case for both of them. This also requires elaborating a more specific conception of e.g. intergenerational justice. So let us see what a more internal and specific account

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may look like. To begin with, it should meet some general requirements having mostly to do with the viewpoint of legitimacy. Because in pursuing sustainable development the rich countries should lead by example, it is appropriate that the desired account is based on a liberal, particularly a liberal-egalitarian theory of justice. A theory, moreover, which is also universalist in scope and so in its application spatio-temporal neutral. Both characteristics seem appropriate if the theatre of operations for the theory comprises liberal democracies but in a rapidly globalizing context and in a long-term perspective. Interesting examples would be Rawls’ political liberalism (with its revised ‘just savings’ principle), Barry’s account of (intergenerational) justice; Wissenburg’s ‘restraint’ principle and Norton’s account of intergenerational equity. Because the accounts of justice mentioned imply mostly a rather minimalist view of our moral responsibility for or toward future generations, it may be helpful to conceive them in the framework of ‘Praxisnormen’ proposed by Dieter Birnbacher (1988, p. 197–240). Although he justifies them in a indirectly utilitarian way, they can in this context be adopted equally well by adherents of other ethical orientations, especially because they have a close affinity with the development-aspect of sustainable development Birnbacher specifies the following ‘Praxisnormen’, which are norms for collective action in particular. Human action should not be such as to a. threaten human survival and the survival of higher species (i.e. collective selfpreservation); b. put in jeopardy a decent human existence in the future (broad no harm principle). Moreover, we should take care to c. avoid creating additional irreversible risks; d. preserve and enhance present natural and cultural resources; e. help others in the pursuit of these and other future-oriented goals; and f. educate the next generation(s) in the spirit of these norms. 3.2.3 The theory of justice (Barry) To flesh out the so far rather abstract remarks about justice and justification, it may be helpful to see what an account of intergenerational justice may look like. Brian Barry’s account seems an attractive one because it ties in explicitly with the concern about sustainability. Barry (all references are to his 1999 paper unless otherwise indicated) starts with a question about the ‘ethical status’ of sustainability: ‘Is sustainability ... either a necessary or a sufficient condition of intergenerational distributive justice?’ He takes justice here in a narrow sense which focuses on ‘conflicts of interests’, so that questions of intergenerational justice are ‘characteristically questions of intergenerational distributive justice’. In answering his question he starts from a premiss of the fundamental equality of human beings. From this premiss, taken by him as an axiom, he derives four theorems. ‘1. Equal rights. Prima facie, civil and political rights must be equal. Exceptions can be justified only if they would receive the well-informed assent pf those who would be allocated diminished rights compared with others. 2. Responsibility. A legitimate origin of different outcomes for different people is that they have made different voluntary choices. (However, this principle

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comes into operation fully only against a background of a just systems of rights, resources and opportunities.) The obverse of the principle is that bad outcomes for which somebody is not responsible provide a prima-facie case for compensation. 3. Vital interests. There are certain objective requirements for human beings to be able to live healthy lives, raise families, work at full capacity, and take part in social and political life. Justice requires that a higher priority should be given to ensuring that all human beings have the menas to satisfy these vial interests than to satisfy other desires. 4. Mutual advantage. A secondary principle of justice is that, if everyone stands ex ante to gain from a departure of a state of affairs produced by the implementation above three principles, it is compatible with justice to make the change. (However, it is not unjust not to.)’ (p. 97–98) Obviously, mutual advantage (a Pareto improvement) which does not derive from such a departure, e.g. increased energy efficiency, is a fortiori compatible with justice and is in the interest of all concerned. Barry has doubts about this as far as the distant future is concerned because such improvements are expressed in terms of preferences and to know these becomes more difficult the further we have to look into the future. But what other implications do these principles have for intergenerational justice? The first, equal rights, has no direct intergenerational implications. The same goes for the second, which is applicable foremost within generations, unless we take the view that people can control the size of the population (a topic that will not be discussed here) or unless we can foresee that because of our use of resources in the present we leave future generations less than we started with. In the latter case (above all the use of non-renewable resources) we have the duty, of course, to leave them compensating “assets”, e. g. additional productive capacity. It is the third principle, vital interests, which has direct consequences; this is by way of the universalist idea that ‘locations in space and time do not in themselves affect legitimate claims’ (p. 99; 100). The implication is that the vital interests of people in the future have the same moral weight as similar interests in the present. The core concept of sustainability, which is ‘irreducibly normative’ (p. 105), is, as Barry puts it, that there is ‘some X whose value should be maintained, in as far it lies within our power to do so, into the indefinite future’ (p. 100). The content of X should not be utility in the sense of preference-satisfaction, Barry argues, but the chance of members of future generations to live the good life according to their own conceptions of it (which do not exclude our conceptions of it). So X needs to be conceived as ‘some notion of equal opportunity across generations’ (p. 104). And this has to be conceived, according to Barry, as maintaining conditions such as ‘to sustain a range of possible conceptions of the good life.’ Harming their vital interests is not a part of these conditions but neither is leaving them a world in which nature is ‘utterly subordinated to the pursuit of consumer-satisfaction’ (p. 105). We may see here a moral basis for Birnbacher’s important norm of not creating irreversible risks (see already Barry 1978, p. 243; 1977, p. 275; and, very clear, Goodin, about ‘keeping the options open’ in 1982, p. 209 ff.).

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It follows from these considerations, especially from the principle of responsibility, that sustainability is at least a necessary condition of intergenerational justice. For ‘no generation can be held responsible for the state of the planet it inherits’ (p. 106). So, to begin with they should not be worse off than we are. But ‘the potential for sustaining the same level of X as we enjoy depends on each successive generation playing its part. All we can do is leave open the possibility, and that is what we are obliged in justice to do’ (p. 106). So far the argument has been based upon the presumption of a fixed population. If we take into account population growth and, moreover, that the X which has to be maintained is defined over individuals, matters are becoming much more complicated and the prospects of sustainability much less bright. There is not much the present generation can do about the size and growth of the present population, but it can be held, at least to a limited extent, responsible for them. To the extent we take this responsibility we will be more just to our successors (leaving them less resources spread over fewer people) than otherwise (p. 111). If, for the case of population growth, we subordinate the principle of vital interests to the principle of responsibility, we might even say that that sustainability is even a sufficient condition of intergenerational justice: what more could we reasonably be expected to do?’ (p. 112). Of course, we have also to take into account – for ‘the principle of vital interests forces us to focus on the fates of individuals’ (p. 112) – that the vital interests of many people in the present are not met and that the vital interests of many people in the future will predictably not be met too, even if the criterion of sustainability is satisfied. This suggests, according to Barry, that there is not an absolute distinction between intergenerational and intragenerational justice. One might, again, here invoke the principle of responsibility as having priority above that of vital interests, but we ‘must recognize that intragenerational injustice in the future is the almost inevitable consequence of intragenerational injustice in the present’ (p. 113). All the more reason, one is inclined to say, to try seriously to meet the vital interests of people now living without putting sustainability in jeopardy. A certain tension in Barry’s attempt to justify sustainability in a liberal-egalitarian framework should by now be clear. As he argues, sustainability obliges us to think in terms of (conceptions of) the good life: the possibility of the good life in the future is what is at stake in the pursuit of sustainability. But policy in liberal democracy is supposed to be neutral in respect to conceptions of the good life! So taking sustainability seriously makes it unavoidable to rethink and reappraise the nature and the boundaries of liberal neutrality. We will meet this theme again in the discussion of ‘weak’ versus ‘strong’ conceptions of sustainability and in the debate on sustainable patterns of consumption. Particularly changing patterns of consumption may prove to be very challenging within a liberal framework of thought. For consider that present-day affluent societies manifest a ‘widespread, shared belief in the value of consumption for everyone, a belief that what can be achieved through consumption is at least part of “the good life for humans”, and hence that “the good society” is one that provides ample opportunities for people to enjoy these benefits, and indeed to an ever-increasing extent’ (Keat p. 342). So, infringements on the liberty to consume or even a decline in real income (on account of price rises while incomes remain the same) may cause much resentment among

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consumers and thus bodes not well for environmental policies aiming at reduction of consumption, even if it means only (!) reduction of the material and energy content of current patterns of consumption (in case increases in efficiency and substitutions are not enough to bring that reduction about). 3.2.4 Vulnerability, the Future and the Environment (Goodin) The emphasis so far has been on justice and its theoretical elaboration which is not surprising since justice is a core idea in the predominant conceptions of sustainable development. This does not mean there are no other ethical ideas on which to base our moral responsibility for future generations, the poor and the environment (which are implicit in any acceptable account of sustainable development). It may be enlightening and morally attractive to some readers to briefly discuss another ethical approach (informed by utilitarianism) which emphasizes the moral relevance of vulnerability. At any rate this approach, developed by Goodin, would seem to embody an apt moral view of our relations to the poor and future generations. Additionally, this approach also leads naturally to a global and long-term perspective on the environmental plight of liberal democracies. In what follows the emphasis is on future generations. Future generations are especially vulnerable to the harmful effects of our choices and behaviour. They are heavily dependent on us for the material and cultural resources available to them. According to Goodin, our responsibility to leave them enough resources has its strongest moral basis in this vulnerablity. The case for this view consists of a negative and a positive part. The negative argument amounts to a rejection of theories of intergenerational justice, especially tot the extent they imply reciprocity between us and members of future generations. The positive argument invokes special duties, duties of the type parents have towards their children (sometime the reverse too), spouses or friends towards each other; duties to help needy strangers, if one can help without too great sacrifices to oneself and if others are not around or able to help, also belong here. Crucial to special duties are, in Goodin’s view, aiding and protecting dependent and therefore vulnerable people. If we take this view, it becomes readily clear that these special duties are not so special after all, because vulnerability by dependency if rather frequent in our society. This leads to a general positive duty to help others in vulnerable positions. The account of sustainability one could elaborate from these and similar suggestions need not be limited just to the idea of maintaining (human) welfare or utility over time with environmental concern in a subordinate position. Goodin himself has in the meantime extended the theory outlined to a consequentialist theory of value of nature which can be used to argue for strong policies for the protection of nature and the global environment (Goodin 1992 and, especially, 1996).

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3.3 Efficiency and sufficiency – discussing sustainability in theoretical and practical terms As explained at the beginning, the purpose of the present study is to explore the potential of innovations for a sustainable restructuring of the energy system, and to propose specific measures for exploiting and, eventually, realizing these potentials and strategies. Apart from developing and establishing more efficient means (efficiency improvements), it is of course possible to modify the ends that are to be achieved by these means. For the purposes of discussing and transforming these ends, the rather unfortunate term “sufficiency” is used quite frequently. The term is unfortunate because it suggests starting from a catalogue of means, compiled according to criteria of sustainability, and then discriminating between constellations of ends depending on whether those means are sufficient for achieving the ends. Herman Daly, who originated the concept of the extent of using load capacities (“scale”) in the sufficiency discussion, chooses the allegory of a boat on which goods are transported (Daly 1996, p. 50). If one fails to ensure that the goods are evenly distributed on the loading area, the boat can overturn and sink. This mistake can be avoided by improved loading (efficiency); but the load line of the boat, which represents the load capacity, cannot be exceeded without sinking the boat (sufficiency). However, the load mark cannot be established with sufficient precision, because of the uncertainty of the available knowledge, as explained above. Therefore, this concept of sustainability merely helps to distinguish between more or less sustainable options instead of formulating a precise line as the limit of sustainability. The decisive criterion is not the absolute weight, but the decrease in weight of the goods. In the study “Zukunftsfähiges Deutschland” (“Sustainable Germany”, BUND/ Misereor 1996, p. 218), in particular, efficiency improvements as well as the idea of “sufficiency” are emphasized. The study highlights not only the possibility of meeting human needs on the consumption side (not only with regard to the technical efficiency of the production and use of goods) using lower inputs of energy, resources and materials, guided by the criteria of “economizing, regional orientation, shared use [of long-lived consumer goods], durability”; it also stresses the idea that such changes should not be seen as asking for sacrifices and restrictions but rather as some kind of “ecological progress” leading to both the re-achievement of “wealth in time instead of wealth in goods” (p. 221) and to a new “elegance of simplicity” (p. 223). The examples of such a new lifestyle cited there may be vivid, but the study does not prove the general applicability of those welfare-improving sufficiency strategies for all groups of consumers. In reality, sufficiency can and will still involve restrictions and sacrifices in many cases. Options like that cannot be decreed from above in democratic societies. Ultimately, they can only be demanded and enforced by the people themselves. In the light of these considerations, one can assess whether, and to what extent, efforts to transform ends make the existing energy system more sustainable. Following the distinction between efficiency (in the production and use of goods) and sufficiency (in the concrete shaping of lifestyles), one can more generally refer to a

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theoretical and a practical discussion of sustainability10. The theoretical discussion is concerned with improving the means for achieving given ends; the practical debate deals with the examination and transformation of these ends. In the following, we will mainly discuss theoretical aspects, whereas practical aspects are an issue especially in the sense that political instruments that change price ratios intervene in every individual’s potential for achieving his or her objectives. To a certain extent, such measures are accepted as options of government action. As already indicated, the scope of political measures is narrowly limited when such action aims at a far-reaching transformation of ends; it could only be widened by running the risk of state paternalism. Therefore, political measures should be facilitating, but not restrictive in character. To reduce the energy consumed by commuting between home and work place, for instance, limiting the commuting distance through statutory regulation could be taken into consideration as a restrictive measure. Such legislation would, however, be bound to fail, if only for constitutional reasons. Instead, one could support a new thinking in town planning, which as such would lead to a fusion of residential and commercial areas, or one could aim at an improvement of local and regional public transport systems. Still, state activities are not the only option. The transformation of ends can lead to a more sustainable energy system as a result of cultural developments, too. However, with regard to these types of transformations, we cannot formulate any recommendations for governmental actions, apart from providing information e.g. through appropriate product labeling (see chapter 7).

3.4 Interim conclusions The considerations so far lead to some important findings, which will be further scrutinized in the following chapters. It emerges that there is a multitude of relationships between “innovation” and “sustainable development” – both concerning the methods and, above all, the substance –, which can be treated paradigmatically for the energy sector. On the one hand, society and economy depend crucially on the availability of energy; on the other, the goals defined in chapter 3.1.2 cannot be achieved in a lasting way by perpetuating the status quo. Therefore it seems that significant changes in “economy-style” – not least concerning energy consumption, which is supported, in its bulk, by using non-renewable energy carriers – cannot be dismissed. Without sustainable innovations, such changes stand virtually no chance of success. Quite generally, innovations oriented towards sustainable development can (and should) lead to a situation where economic and social achievements regarded as necessary can be produced with a lower “consumption of nature” than would be possible in the absence of such innovations. This implies the requirement – for which we have already argued – to develop the concept of sustainability from a (static) inventorial concept into a (dynamic) concept of utilization. According to the 10

In this application, the terms “theoretical” and “practical” refer to different modes of philosophy. Theoretical philosophy includes epistemology, for instance, while ethics is part of practical philosophy.

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latter, technical progress, social and organizational change etc. are possible contributions of the generations living today to protect the interests of future generations, even in cases (e.g. exhaustible energy resources) where the preservation of stocks, in the classical sense, is not possible. The emphasis on environmental and resource issues does not imply a general rejection of the three-pillar model of ecological, economic and social sustainability often argued for, since the latter takes account of the fact that ecological objectives can only be aimed at successfully if the economic performance (on the national, transnational and global scale) is not diminished substantially, and if dangerous social distortions (within and between societies) are avoided. Yet it takes note of a certain asymmetry between ecological postulates concerning sustainability, on the one hand, and economic and social sustainability demands, on the other: In as far as the first are based on laws of nature, they must always be considered with the highest priority; for such laws cannot be influenced, either by political, or by educational or information efforts. Again, this statement must be qualified by the observation that, contrary to common conceptions, there is no “reference work on the laws of nature” where those rules can be looked up. As we discussed above, the uncertainty of scientific results is constitutive especially in the areas that are relevant for the debate about sustainability. In contrast to the economic and social “pillars”, requirements for preserving nature have no voice in the political process, which is why the ecological dimensions are often neglected in favor of special interests and avoidance of adjustments and social hardship. Ecology is an “external effect” not only for the market but also for politics. This is particularly true if the effects only emerge after a long time, are scientifically uncertain or controversial, or not immediately “noticeable” (as was the case of air pollution, for instance, in the past). Science can, and must, act as a corrective here by emphasizing the neglected ecological dimension. Hence, sustainable energy innovations are defined, in the present study, as new technological, organizational or institutional solutions or processes leading to a qualitative improvement of the environment and a reduction of environmental risks, without inducing unacceptable economic or social disadvantages. This is achieved mainly by keeping such disadvantages as small as possible and compensating them by additional measures, if necessary. Although it may be possible to change social habits through information and education efforts, innovations that influence the functioning of economic and social subsystems seem more promising for promoting sustainability than those trying to influence the thinking of the individuals concerned. For this reason, “economic instruments” of environmental protection are of particular importance in all innovations oriented towards sustainability. Simply through an ecological adjustment of price ratios, they not only induce us to use existing technologies in a manner as environmentally sound as possible; they also provide powerful incentives to give the innovation activity – whose substance cannot be predicted in any concrete detail – generally a more “environment-friendly” direction. Following these foundations, the next step, taking into account the results worked out so far, will be to analyze the sustainability of the (future) energy system and the (technical) potentials for sustainable energy innovations (increasing energy efficiency and developing regenerative energy sources).

4 Towards a Sustainable Energy System – Legal Basis, Deficits and Points of Reference

4.1 Fundamental legal standards for a sustainable energy system As explained in the introduction, the research group does not set its own objectives and standards on which the analysis is based; but selects its criteria from legal standards set out in international treaties and from EU and national law.1 Naturally, such legal standards do not represent (quantitative) targets that give rise, conclusively, to specific strategies. However, they do define – as a “regulative concept of sustainability”, so to speak – directions and limits, within which politicians and other agents have to set concrete objectives and develop programs (with sustainable development as the constitutive concept). The conceptional considerations developed in chapters 2 and 3, as well as the criteria for evaluating and decision-making, help execute the transition between the “abstract legal standard” to concrete recommendations for action in a transparent way. They are instrumental not only for concretizing, but also for developing further those standards without claiming to be comprehensive or even aiming at evaluating the consequences of the sustainability concept for the legal system. 4.1.1 Developments in international law concerning climate protection The Rio Conference Following its introduction by the Brundtland Commission, the concept of sustainable development was taken up and further elaborated in the documents of the United Nations Conference on Environment and Development (UNCED) in Rio de Janeiro, most notably in Agenda 21. “Protection of the atmosphere” is highlighted especially in chapter 9 of Agenda 21, even if it does not put the signatories under any obligation. The United Nations Framework Convention on Climate Change (UNFCCC), on the other hand, was the first definitive document on climate policy to be legally binding in terms of international law. It was developed by an intergovernmental negotiating committee appointed by the UN (INCC2), signed by about 1

2

It is not our intention to give a comprehensive review of the sprawling legal discussion on the subject of sustainability; we will rather discuss some aspects that are important with regard to the recommendations for action presented in chapter 7. Intergovernmental Negotiating Committee for a Convention on Climate Change.

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160 countries at UNCED, and has been in force since March 21, 1994.3 According to article 2, the main objective of the UNFCCC is the “stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”. This means that the aim is, merely, to limit the increase of greenhouse gases in the atmosphere.4 Article 3 of the UNFCCC takes up specific components of the principle of sustainable development, by referring to the precautionary principle (par. 3), and by the stipulating that the climate system should be protected for the benefit of present and future generations (par. 1). In art. 3, par. 5 of the UNFCCC, the objective of a “sustainable […] development in all parties [to the convention]” is mentioned explicitly. Specifically for the energy sector, the following statements are most relevant: According to art. 4, par. 2 (a) UNFCCC, each of the so-called developed countries listed in Annex I binds itself to “adopt national policies and take corresponding measures on the mitigation of climate change, by limiting anthropogenic emissions of greenhouse gases and protecting and enhancing its greenhouse gas sinks and reservoirs”. Art. 4, par. 2 (b) UNFCCC stipulates that the signatories must report periodically to the conference of the parties to the convention, with the aim, to be achieved by the year 2000, of “returning individually or jointly to their 1990 levels these anthropogenic emissions of carbon dioxide and other greenhouse gases not controlled by the Montreal Protocol”.5 However, these political commitments are still6 not binding with regard to international law,7 although they contain the basic elements of the international understanding of the concept of sustainable development in the energy sector. From the legal documents of the Rio Conference it was deduced that the exploitation of non-renewable resources should be limited to such materials for which there are long-term replacements in the form of renewable primary resources, or of secondary resources.8 Yet, in this form, the so-called Second Rule of Management is not laid down in international law; the phrase “long-term” makes it hardly practical, due to unforeseeable developments concerning the economic usefulness of additional resources (e.g. oil shale in the place of crude oil); furthermore, the needs of present generations,9 which also exist and must be equally respected in the context of sustainable development, would not be met if the rule were to be applied strictly.10 3 4 5 6 7 8

9

10

Secretariat of the UNFCCC (ed.), United Nations Framework Convention on climate Change, p. 1. See also Hohmann, Ergebnisse des Erdgipfels von Rio, NVwZ 1993, 311/316. V. 1987-9-16, BGBl. II 1988, p. 1015. This protocol mainly aims at protecting the ozone layer by gradually outlawing the use of CFCs. See art. 25 para. 1 Kyoto Protocol. On the pending ratification, ibid. under 2. See Kloepfer, Umweltrecht, 2. edition 1998, § 9 Rn. 84; Bail, Das Klimaschutzregime nach Kyoto, EuZW 1998, 458. Bundesministerium für Umwelt, Naturschutz und Reaktorsicherheit, Bericht der Bundesregierung anlässlich der VN-Sondergeneralversammlung über Umwelt und Entwicklung 1997 in New York, Auf dem Weg zu einer nachhaltigen Entwicklung in Deutschland, BT-Drucks. 13/7054, p. 6, and Enquête Commission ”Schutz des Menschen und der Umwelt”, BT-Drucks. 13/7400, p. 13. A “development that meets the needs of the present without compromising the ability of future generations to meet their own needs”, World Commission on Environment and Development, Our Common Future, 1987, p. 43. For details, see Frenz, Sustainable Development durch Raumplanung, 2000, p. 20 ff.

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The Kyoto Protocol Basic duties. Following the Rio Conference, international climate policy has been valorized significantly. On the occasion of the third convention of the Conference of Parties (COP-3)11 to the UNFCCC in Kyoto on December 12, 1997, the so-called Kyoto Protocol was adopted, which, in contrast to the Framework Convention itself, set legally binding12 emission targets aiming at the reduction of CO2 emissions from the industrial and transformation countries. Of course, according to art. 25, par. 1, the Kyoto Protocol will become legally binding under international law only when at least 55 signatory countries, or their parliaments, have ratified the protocol and deposited the corresponding deed of ratification with the Secretary General of the United Nations. Furthermore, among those countries having ratified the protocol must be Annex-I countries13 that are jointly responsible for at least 55 % of the CO2 emissions in the year 1990, which are cited in this annex. Not one of the signatory parties listed in Annex I of the Kyoto Protocol had deposited a deed of ratification by the end of 2001. Since then, however, such documents have been submitted by the European Union or its member states, respectively. The commitment period laid down in the Kyoto Protocol – i.e. the years in which, on average, the goals for the individual countries, as defined in Annex B, must be achieved – is five years (2008-2012), according to art. 3, par. 1. The central stipulation is laid down in article 3, by which the industrialized nations included in Annex I commit themselves not to exceed – individually or jointly14 – their assigned emission limits or to default on the country-specific reduction commitments, respectively, inscribed in Annex B. The aim is to reduce the overall emissions of greenhouse gases (GHGs) by all the industrialized countries listed in Annex I by at least 5 % of the 1990 levels.15 GHGs include CO2, methane, nitrogen oxides, chlorofluorocarbons (CFCs) and some others; only the first three gases are relevant for the energy sector. All GHGs are converted into so-called CO2 equivalents, according to their effects on the climate. The GHG emissions stemming from the provision and use of energy account for ca. 80 % of all anthropogenic emissions. Nearly 95 % of these energy-related emissions is CO2, about 4 % is methane; the remainder are nitrogen oxides. According to Annex B, all member states of the EC have committed themselves to a reduction of 8 % compared to the situation in 1990.16 The individual reduction commitments vary considerably among the EU member states, between – 28 % for Luxembourg and + 27 % for Portugal. The target for Germany was set at – 21 %. According to art. 3, par. 3, this number may reflect not only the reduction in emissions, but also the removal of greenhouse gases through increased CO2 absorption, which can be achieved by land-use changes and forestry activities. 11

12 13 14 15 16

On details of the development in climate policy between the environment summit of 1992 in Rio de Janeiro and the 3rd Conference of the Parties (Kyoto 1997), see Ehrmann, Die Genfer Klimaverhandlungen, NVwZ 1997, 874 ff. Bail, Das Klimaschutzregime nach Kyoto, EuZW 1998, 460. Annex-I states are the industrial countries listed in Annex I of the Framework Convention on Climate Change. Referring to joint implementation of policies and measures. Art. 3, par. 1. USA: - 7 %; Japan, Canada, Poland and Hungary: - 6 %; Croatia: - 5 %; New Zealand, Russia, Ukraine: 0 %; Norway: + 1 %; Australia: + 8 %; Iceland: +10 %.

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The Kyoto Protocol declares climate protection to be a core element of sustainable development. With regard to Annex-I countries realizing their targets, one has to distinguish between national and international measures. The exemplary list under art. 2, par. 1 (a) may serve as a (albeit rudimentary) guide to national policies and activities that would support a sustainable development. The “enhancement of energy efficiency”, “research on, and promotion, development and increased use of, new and renewable forms of energy […] and innovative environmentally sound technologies” and the limitation and/or reduction of methane emissions in connection with the production and distribution of energy are the propositions of particular relevance for the energy sector. According to art. 2, par. 1 (b), the signatory parties are urged to cooperate in order to enhance the effectiveness of the individual policies and measures by exchanging their experiences and information. Flexibilities. The international mechanisms are meant primarily to support economically efficient ways of climate protection. The aim is to reduce global greenhouse gas emissions at optimum cost efficiency. To this end, the Kyoto Protocol provides various new mechanisms under international law. The mechanism for environmentally sound development provided in the protocol (art. 3, par. 12 in conjunction with art. 12) allows the Annex-I countries to carry out emission-reducing projects in developing countries and to use the emission reductions certified as such for [meeting] their own obligations concerning limitations and reductions. According to art. 12, par. 2, this mechanism serves “to assist Parties not included in Annex I in achieving sustainable development and … to assist Parties included in Annex I in achieving compliance with their quantified emission limitation and reduction commitments under article 3“. Hence, the goal is to enable a cost-efficient realization of the reduction targets on the part of the industrial countries, on the one hand, and to promote the cooperation or technology transfer between industrial countries and developing countries, on the other. However, according to art. 3, par. 3 (b), the industrial countries are allowed to meet only part of their commitments concerning emissions and reductions by way of emission reductions through clean-development projects. Another way of fulfilling the legal commitments concerning reductions [by activities] on foreign territory, though limited to the territories of the Annex-I countries, is opened up by the option of joint project implementation according to art. 3, paragraphs 10 and 11 in conjunction with art. 6, par. 1. Accordingly, the “reductions account” of a country in western Europe, for instance, might be credited with the emission reductions following from emission-effective modernizing measures at outdated, eastern European power plants. However, according to art. 6, par. 1 (d), the reduction units acquired in this way are only allowed to supplement domestic measures. Furthermore, art. 6 only covers reduction units stemming from concrete emission-reducing measures. Emission trading among industrial countries also enables a shift of commitments. In fact, no real efforts have to be made insofar as rights are purchased from a country that keeps within the agreed emission limits and capitalizes on this situation by selling certificates instead of crediting itself with over-fulfillment beyond its obligations. Still, by stipulating that the trade in emission rights shall also be no more than “supplemental” to any domestic measures, art. 17 presumes an upper limit on such dealings. The interpretation of this element of fact is extremely con-

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troversial. While the US insisted on full flexibility, even before their complete withdrawal from the Kyoto Protocol under President Bush, the EU argued that half of the reduction commitments must be fulfilled domestically.17 “Supplemental” does not mean “exclusive”; but implies a mere extra function accounting for 50 %,18 if not 49 % as an upper limit, if the majority contribution is to come from domestic measures and only an additional, supplemental part is to be contributed through measures in another country, as the wording of the Kyoto Protocol suggests. Beyond that, art. 17 demands that the “principles, modalities, rules and guidelines, in particular for verification, reporting and accountability“ are defined and elaborated by the Conference of the Parties. Continuation at The Hague, Bonn and Marrakesh. These and other questions still open after Kyoto were supposed to be resolved at the 6th Conference of the Parties (COP-6) at The Hague, which convened from November 13-24, 2000 – and ended in failure. The main obstacle to a common solution was disagreement about the question to what extent a reduction, or storage, of greenhouse gases through socalled sinks created by land-use changes and forestry measures should be taken into account with regard to the reduction duties of the signatory parties. The reluctant position of the European Union is based on the fact that, presently, there is little scientific evidence for carbon sinks being allowable in the context of emissions; but closer inspection does reveal a multitude of scientific questions. In this context, we should point to “Background Information” published by the Max Planck Society for the Advancement of Science (Germany), about the role of forests and their cultivation in the natural carbon cycle and their effects on the global climate. There it is stated that “presently, science does not know exactly yet which ecosystems are so-called carbon sinks, whether these sinks are sustainable, and how the enormous amounts of carbon stored in soils should be assessed”. At the same time, the contest is underway to decide which region is a global sink for, and which is a global source of CO2. For instance, one publication from North America shows that the USA is the only carbon sink in the northern hemisphere. Since then, another publication has stated the conflicting position that Europe is the only sink among the countries of the northern hemisphere.”19 The negotiations, “interrupted” in The Hague, were resumed in Bonn in July 2001. At that point, the US had completely rejected the Kyoto protocol. The EU still reached a compromise with Japan, Canada and Russia, so that the protocol could be ratified regardless of the rule that 55 countries must ratify, and that these countries have to represent 55 % of the emissions of the industrial countries, with the USA contributing 40 %. This agreement, however, came at the price of a far-reaching erosion in content: Biological sinks for storing carbon monoxide shall be allowable to a large extent and on varied terms depending on the country concerned. This particularly favors the three parties to the compromise and reduces the obligations of 17 18 19

See also: FAZ of 11-18-2000, no. 269, p. 15, right column, “Nur ein Tropfen auf den heißen Stein”; FAZ of 11-23-2000, no. 273, p. 19 “BDI: Klimavereinbarung ist zwingend nötig”. Müller-Kraenner, Zur Umsetzung und Weiterentwicklung des Kioto-Protokolls, ZUR 1998, 113/114: upper limit of 50 %. Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V., http://www.mpg.de/pri99/ hg_hainich.htm.

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the industrial nations by ca. 169 million tons of CO2. The so-called flexible mechanism, with its provisions for accounting extraterritorial activities against obligations to reduce emissions domestically, may be applied in a generous fashion, even if nuclear power plants must not be taken into account. Developing countries, including the OPEC states, receive subsidies of up to $ 410 mil. from the EU and other industrial countries to support climate protection projects.20 Strict result checking in the form of legally binding sanction mechanisms in the case of noncompliance with reduction obligations, which was not part of the agreement, was the subject of a follow-up conference in Marrakesh, held from October 29 to November 9, 2001. At the Marrakesh conference, more detailed reporting duties and a so-called compliance system were agreed, still leaving open the question whether or not that system is binding under international law. An “enforcement branch”, composed of six representatives from developing countries and four from industrial nations, decides on noncompliance with obligations arising from the agreement. The same body establishes an action plan to be implemented where emission and reporting duties are not fulfilled. Countries that fail to meet their reduction obligations are excluded from selling their emission allowances to other signatory parties. Outlook. Considering the close connection between climate protection and the postulate of sustainability in international law (concerning the environment) formulated in the Kyoto Protocol, and taking into account the flexible mechanisms proposed as a problem-solving strategy as well as the domestic policies and measures cited as examples therein, we are confronted with the question to what extent these tools are appropriate or sufficient to achieve the long-term objective, laid down in art. 2 UNFCCC, of preventing dangerous, anthropogenic disorders of the climate system. This question must be answered especially with regard to the responsibility of generations living today for future generations, the intergenerational component of sustainability, which is generally acknowledged to be the central idea of “sustainable development”. The idea is taken up in art. 3, par. 1 UNFCCC: “The Parties should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities. Accordingly, the developed country parties should take the lead in combating climate change and the adverse effects thereof.” This would require binding and real commitments leading to actual reductions in emissions – commitments that have not been made so far. Still, the Climate Conference of Marrakesh removed the obstacles to the Kyoto Protocol coming into force at all. On March 4, 2002, the EU environment ministers decided to ratify the Protocol.

20

F.A.Z. of 07-24-2001, no. 169, p. 1 f.; Handelsblatt of 07-23-2001.

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4.1.2 The legal framework in European law Treaties In European law, sustainable development is touched upon as early as in the preamble to the EU and then in art. 2 indent 1 EU. It is called for, especially, in the basic provision of art. 2 EC in the version of the Amsterdam amendment to the treaty. This directive prescribes a sustainable development in the context of economic life and thus clarifies that such a development must not be guided one-sidedly by ecological considerations.21 However, according to the integration clause of art. 6 EC “with a view to promoting sustainable development”, ecological concerns must be considered consistently in connection with the policies referred to in art. 3 EC. The very dictate of integration formulated in that clause – which is, of course, limited to the requirements of environmental protection and which can be understood, at the same time, as an expression of the integrative approach immanent to sustainability – is suitable for implementing the obligation, addressed at all signatory parties, “to take climate considerations into account, as far as they are feasible, in their relevant social, economic and environmental policies …”, which is contained in art. 4 par. 1 lit. f UNFCCC. Since climate protection is among the “environmental protection requirements” cited in art. 6 EC, climate protection measures must be taken into account when laying down and implementing measures in the energy sector according to art. 3 par. 1 (u) EC22. Nevertheless, the postulate of sustainability goes further insofar as it derives its specific character from an abstract, equal integration of ecological considerations with economic and social ones. Hence, ecological concerns must not be considered with preference, neither exclusively nor a priori.23 Consequently, a development is sustainable not just by being compatible with the environment and climate, and by preserving the resource base; beyond that, the social and economic components of the concept of sustainability demand the long-term security and stability of energy supplies (security of procurement) and the preservation of a competitive energy economy (competitiveness).24 The objectives and standards of a sustainable energy policy, against which activities and instruments in the energy sector are to be measured, emerge from a dynamic balance between these determinants.

21

22

23 24

More details in Frenz/Unnerstall, Nachhaltige Entwicklung im Europarecht, 1999, p. 155 ff., 177. Also see Badura, Umweltschutz und Energiepolitik, in: Rengeling (ed.), Handbuch zum europäischen und deutschen Umweltrecht, vol. II, 1998, § 83 Rn. 27. Still, a seperate energy policy does not exist, although it is possible for the purpose of climate protection based on the environment, as becomes clear from art. 175 par. 2 s. 1 indent 3; Steinberg/Britz, Die Energiepolitik im Spannungsfeld nationaler und europäischer Regelungskompetenzen, DÖV 1993, 313/314. More details in Frenz, Sustainable Development durch Raumplanung, 2000, p. 41 ff. See the Commission White Paper, “An Energy Policy for the European Union” of 1995-12-13, KOM (95) 682 fin.; Report of the German Federal Government to the UN Special General Assembly on Environment and Development, New York, 1997 – Auf dem Weg zu einer nachhaltigen Entwicklung in Deutschland, BT-Drucks. 13/7054, p. 38; Badura, Umweltschutz und Energiepolitik, in: Rengeling (ed.), Handbuch zum europäischen und deutschen Umweltrecht, vol. II, 1998, § 83 Rn. 1, 30, 34.

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These statements of principle are supplemented in the section on environmental policy, most notably by the principles of precaution and prevention25 according to art. 174 par. 2 s. 2 EC, which implies future-related action not least on the basis of probabilities supported by facts, as the principle of sustainable development also demands; Principle 15 of the Rio Declaration postulates action even if the factual basis is uncertain.26 Referring specifically to resource economy, art. 174 par. 1 indent 3 EC stipulates a prudent and rational utilization of natural resources. Taking the needs of future generations into account is inherent to this demand.27 However, it is still assumed that natural resources will be, and are, exploited.28 According to art. 174 par. 2 s. 2 EC, the direction of activities to be implemented according to joint decree or prescription by the member states must relate to the polluters, i.e. to the parties that, by their conduct, cause damage to the environment.29 For this, factual evidence has to be available, even if some causal connections are still uncertain.30 Also due to the polluter-pays principle, payments of subsidies to polluters require special justification.31 Programs for action Particularly in the context of energy saving and the stabilization and reduction of CO2 emissions, the concept of sustainable development has been taken up repeatedly in various documents by European bodies. Among them, the 5th Environmental Action Programme (EAP),32 which regards changing existing attitudes as particularly important, deserves special emphasis. Considering the interaction between economic and social development, on the one hand, and the limited load capacity of the environment, on the other, it also reminds us of the necessity to strike a balance between human activity, development and environmental protection. The 5th EAP (1992–1999) was replaced, supplemented and developed further by the 6th EAP (2001-2010),33 whose strategic emphasis is on describing the environmental goals and priorities of the EU strategy for a sustainable develop25

26

27 28 29 30 31 32

33

On the synonymous content, see e.g. Kahl, Umweltprinzip und Gemeinschaftsrecht, 1993, p. 21 f.; Grabitz/Nettesheim, in: Grabitz/Hilf, EU, status: July 2000, art. 130 r Rn. 67; Rengeling, Umweltvorsorge und ihre Grenzen im EWG-Recht, 1989, p. 11; on the differences between the two terms, see e.g. Epiney, Umweltrecht in der Europäischen Union, 1997, p. 99. For more details, see Calliess, Die neue Querschnittsklausel des Art. 6 ex 3 c EGV als Instrument zur Umsetzung des Grundsatzes der nachhaltigen Entwicklung, DVBl. 1998, 559/563; Frenz, Deutsche Umweltgesetzgebung und Sustainable Development, ZG 1999, 143/146 ff. See, in the French version, “prudente et rationelle“ and, in the Danish, “forsigtigt og fornunftigt“. Treated exhaustively in Frenz, Sustainable Development durch Raumplanung, 2000, p. 32 ff. For more details on the extent of this principle, see Frenz, Europäisches Umweltrecht, 1997, p. 55 ff., w.f.N. See Di Fabio, in: FS für Ritter, 1997, p. 807/820 ff; Frenz, Das Verursacherprinzip im Öffentlichen Recht, 1997, p. 298 f. See under 6.1. “Für eine dauerhafte und umweltgerechte Entwicklung. Ein Programm der Europäischen Gemeinschaft für Umweltpolitik und Maßnahmen im Hinblick auf eine dauerhafte und umweltgerechte Entwicklung“, ABl. EG 1993, C 138, p. 1 ff. Communication by the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions, on the 6th EAP, “Umwelt 2010: Unsere Zukunft liegt in unserer Hand“ – Ein Aktionsprogramm für die Umwelt in Europa zu Beginn des 21. Jahrhunderts, 2001-01-24, KOM (2001) 31 fin.

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ment.34 Apart from economic prosperity (economic component) and a balanced social development (social component), the achievement of environmental policy goals, especially the prudent treatment of the natural resources of the earth and the protection of the global ecosystem, is a precondition for sustainable development.35 This environmental policy dimension or component of the sustainability postulate is paid prominent attention in the 6th EAP, which defines the most important goals and measures of EU environmental policy within the time horizon of 2001-2010, with the highest priority on the accelerating global warming, caused by the greenhouse effect, and the resulting climate change. Hence, in contrast to the 5th EAP, whose climate protection strategy was still based on the stabilization of CO2 emissions on the level of 1990, the 6th EAP designates as a long-term objective not only to ratify and implement the Kyoto Protocol (Union-wide reduction of greenhouse gas emissions by 8 % compared to the numbers for 1990, over the period leading up to 2008–2012) but, beyond that, to reduce the emission of greenhouse gases, especially CO2, by 20 %–40 % of the 1990-values by 2020.36 This is intended to take us closer, in the sense of a sustainable development, to the overall objective of stabilizing the concentration of greenhouse gases in the atmosphere at a level that excludes future unnatural fluctuations of the world climate (which requires a reduction by about 70 % compared to the 1990-figures37). More specifically, an EU-wide trade regulation on CO2 emissions shall be developed by 2005; a further switch of electricity production from coal and mineral oil to other sources, natural gas in particular, involving lesser amounts of CO2 emissions shall be achieved; and an increase in the contribution of renewable energies to electric power production shall be promoted.38 This end is served, most notably, by the directive on the promotion of electricity from renewable energy sources in the internal electricity market, passed by the European Parliament and Council on 2001-9-7,39 which lays down two general, direction-setting targets to be met by 2010: The share of renewable energies in the energy consumed in Europe must reach 12 %, where 22.1 % of the electricity consumed must come from regenerative energy sources. Furthermore, a system of certificates of origin for electric power from renewable energy sources shall be put into place. Electricity production from energy-saving combined heat and power systems is to be promoted, on the basis of the EU electricity directive,40 in each member state. The predominant CO2 emissions are to be subjected to a Union-wide system of trading in certificates.41 34 35 36 37 38 39 40

41

KOM (2001) 31 fin., p. 3. See also KOM (2001) 31 fin., p. 11. KOM (2001) 31 fin., p. 28; as stated earlier by the EU Commisioner for the Environment, Ms.Wallström, in FAZ of 2001-01-25, no. 21, p. 7, “Ehrgeizige Ziele beim Umweltschutz”. KOM (2001) 31 fin., p. 28. KOM (2001) 31 fin., p. 30. Passed by the EP on 2001-07-04; see also the Commission proposal for a directive, 05-10-2000 (ABl. 2000, C 311 E, 320). Directive 96/92/EC of the European Parliament and Commission of 1996-12-19, concerning common rules for the internal electricity market; compare, in particular, art. 8 par. 3 and art. 11 par. 3 therein. Proposal for a directive of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC, KOM (2001) 581 fin.

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The European Union strategy for sustainable development The Helsinki European Council of December 1999 invited the European Commission to prepare a “proposal for a long-term strategy dovetailing policies for economically, socially and ecologically sustainable development to be presented to the [Gothenburg] European Council in June 2001”. After the Lisbon European Council (March 23/24, 2000) had issued the strategic goal for the Union “to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”, the Stockholm European Council (March 23/24, 2001) decided that the environmental aspect should be added to the EU strategy for a sustainable development set out in Lisbon – a view that had already been expressed in the 6th Environmental Action Programme. The strategy for a sustainable development is to serve as a catalyst for political decision-making and public opinion in the coming years; it shall become the driving force towards institutional reforms and a far-reaching change in political, economic and public thinking, leaving behind the short-term, profit-oriented perspective and moving towards a longer-term mode of thinking and acting, taking account of the social and ecological consequences for the habitat and environment of human beings. The EU strategy for sustainable development42, which was expressly welcomed by the European Council of Gothenburg (June 15/16, 2001)43, thus constitutes the first comprehensive concept for sustainability on the European level. With it, the EU also fulfills a commitment given at the Rio Conference, according to which it was to develop strategies for sustainable development in time for the World Summit on Sustainable Development (Rio + 10), which was held in Johannesburg from September 2-11, 2002. Accordingly, the postulate of sustainability must become a core element in all fields of policy44. The strategy also lists the goals, priorities and (immediate) measures needed to achieve a comprehensive sustainable development, including those of importance for the energy sector and others intended to counteract climate change and increase the utilization of clean energies45, in essence identical to those cited in the 6th EAP. On this list are, most notably, the gradual removal of subsidies for the production and use of fossil fuels (by 2010), a new framework for the taxation of energy, the introduction of the trade in CO2 allowances, the promotion of alternative fuels, such as bio-fuels for cars and trucks, and measures to promote energy efficiency46. All dimensions of sustainable development according to the present EU strategy were to be revisited at each spring session of the European Council, the first of which took place in Barcelona, in spring 2002, and then revised comprehensively at the beginning of each new Commission’s term of office. At the same time, as a supporting measure, the European Parliament and the Commission shall establish a committee and “round table”, respectively, for sustainable development, the latter consisting of about ten independent experts representing a wide range of views and not bound by national or other political interests. 42 43 44 45 46

Communication by the Commission: Sustainable development in Europe for a better world: the European Union’s startegy for sustainable development, May 15, 2001, KOM (2001) 264 fin. Presidency conclusions from the European Council (Gothenburg), June 15/16, 2001, p. 4. KOM (2001) 264 fin., p. 7. KOM (2001) 264 fin., p. 12. For details, see KOM (2001) 264 fin., p. 12 f.

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4.1.3 Constitutional framework In the German constitution (Grundgesetz, GG), the concept of sustainability in specific areas follows, mainly, from art. 20 a, where “protecting the natural fundamentals of life” is laid down also with regard to the responsibility for future generations.47 For the present generations’ long-term responsibility, which is explicitly laid down in the state definition of environmental goals, links this definition to the central postulate of sustainability, which is, according to the original, still formative definition by the Brundtland Commission: [to strive for] “a development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Thus, the climate48 is protected even if there is no individual legal reference and, hence, no compelling duty of protection on the part of the state through the legal concept of constitutional duties of protection derived from art. 2 par. 2 in connection with art. 1 GG.49 The generations living today have to curb their actions so that later generations will have the fundamentals of life at their disposal, which would enable them to prosper. Of course, this does not translate into a concrete measure of the economizing and safe-guarding required. It is up to the legislators to concretize this component of the state definition of environmental goals for specific areas, always taking into account other constitutional stipulations. For the energy sector, e.g. energy saving measures may be considered. The economic and social components of the principle of sustainable development are, as such, not included in art. 20 a GG, but can be gathered from art. 12, 14 GG and art. 20 par. 1 GG, respectively. Thus, the ecological side is balanced by two counterpoints of equal weight, which must be taken into account as of equal importance in a comprehensive weighing process, in order to avoid a bias towards environmental issues.50 4.1.4 A duty to protect the environment? The individual elements of art. 174 par. 1 ECT describe the contents of environmental policy in more detail and direct this policy towards certain goals. Considering the upward revaluation of environmental protection in art. 2, 3 ECT as well as in art. 130 s ECT, as far back as with the Maastricht Treaty, the phrasing “community policy on the environment shall contribute to the pursuit of the following objectives” would not have implied a relativization compared to the precursor provision of art. 174 par. 1 ECT.51 Hence, the environmental policy assumed as such is bound 47 48 49

50 51

See Kloepfer, in: Bonner Kommentar, status: 77. Lfg. 1996, art. 20 a Rn. 58 ff.; Epiney, in: v. Mangoldt/Klein/Starck, GG II, 4. edition 2000, art. 20a, Rn. 30, 97. Scholz, in: Maunz/Dürig, status: 35. Lfg. 1999, art. 20 a Rn. 36; Epiney, in: v. Mangoldt/ Klein/Starck, GG II, 4. edt. 2000, art. 20 a Rn. 18; Murswiek, NVwZ 1996, 222/225. Steinberg, Verfassungsrechtlicher Umweltschutz durch Grundrechte und Staatszielbestimmungen, NJW 1996, 1985/1991; but also see Kruis, Der gesetzliche Ausstieg aus der „Atomwirtschaft“ und das Gemeinwohl, DVBl. 2000, 441/443. Frenz, Nachhaltige Entwicklung nach dem Grundgesetz, in: Hendler/Marburger/Reinhardt/ Schröder, Jahrbuch des Umwelt- und Technikrechts 1999, UTR 49, 1999, p. 37, 50 ff. Epiney/Furrer, EuR 1992, 369 (381 f.).

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by the four elements cited there. If these are not in place, the Community needs to take action.52 Still, the objectives will never be achieved entirely. From that perspective, permanent action by the community is required. For this reason, and due to limited organizational resources, it is hardly possible to work towards the goals listed in art. 174 par. 1 ECT in every area. Hence, the Community is not obliged to act in specific cases,53 and the “market citizens” have no right to Community action and, in turn, are not entitled to environmental protection; art. 174 ECT cannot be applied directly.54 Art. 20 a GG also describes a target quantity for sustainable development, especially for its intergenerational component; it is intended for implementation through the legislator, who, as is the case on the Community level, faces the problem that he cannot take action in all areas at the same time. The constitutional protection commitments relate more closely to the individual, to protect human health55 as well as property56. They demand environmental protection measures, also in the interest of later generations,57 but only as such, not in any concrete manifestation; the more specific shaping of them is a matter for the legislator. Thus, these commitments demand the maintenance of a minimum standard, an “ecological subsistence level”.58 However, they give grounds for subjective claims only if the due measures do not materialize, or if they are clearly insufficient for meeting, or even coming close to, the protection target.59 Still, regarding sustainable development, this has to be welcomed even if the measures do not promise a lasting effect and comprehensive environmental protection without shifting the pollution from one environmental medium to another.60 4.1.5 Implementation in energy law Foundations for a sustainable development also appear in more recent legislation concerning energy law in Germany. For instance, the purpose of the Energy Economy Act (Energiewirtschaftsgesetz, EnWG)61 is to provide electricity and gas as safely, cheaply and environmentally sound as possible, in the common interest. This touches upon economic aspects, but also refers clearly to environmental issues, for 52 53

54 55 56 57 58 59 60 61

Also for instance Grabitz/Nettesheim, in: Grabitz/Hilf, art. 130 r Rn. 10. Anders Epiney, Umweltrecht, p. 95 f.; see also Heinz/Körte, JA 1991, 41 (43); Kahl, Umweltprinzip und Gemeinschaftsrecht, p. 94; Lietzmann, in: Rengeling, Europäisches Umweltrecht und europäische Umweltpolitik, p. 163 (174 f.). Grabitz/Nettesheim, in: Grabitz/Hilf, art. 130 r Rn. 13; also see Krämer, EuGRZ 1998, 285 (291). Already BVerfGE 53, 30 (57); 56, 54 (73); BVerfG, NJW 1996, 651. BVerfG, NJW 1998, 3264 (3265). Frenz, Nachhaltige Entwicklung nach dem Grundgesetz, in: Hendler/Marburger/Reinhardt/ Schröder, JUTR 1999, S. 37, 65 f. Kloepfer, Umweltrecht, 2. edition. 1998, § 3 Rn. 38. BVerfGE 77, 170 (215); 92, 26 (46); BVerfG, NJW 1996, 651. More in Frenz/Unnerstall, Nachhaltige Entwicklung im Europarecht, 1999, p. 202. Act concerning the supply of electricity and gas (Energiewirtschaftsgesetz – EnWG) of 19984-24, BGBl. I p. 730, especially as amended by art. 2 of the act granting priority to renewable energy sources (Erneuerbare-Energien-Gesetz – EEG) and in amendment of EnWG and the act covering mineral-oil taxes of 2000-3-29, BGBl. I p. 305.

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environmental soundness means, according to § 2 par. 4 EnWG, that energy provision meets the requirements of dealing with energy in a rational and economical manner, ensuring the sparing and sustainable use of resources, and putting as little strain as possible on the environment. The proviso of dealing with energy in a rational and economical manner runs parallel to art. 174 par. 1 indent 3 EC, while the stipulation of a sparing and sustainable use of resources concretizes the protection of the natural fundamentals of life also in responsibility for future generations, as demanded in art. 20a GG. The same applies to the requirement to put as little strain as possible on the environment. These general stipulations must be fulfilled by the basic decision in the Energy Economy Act for a far-reaching liberalization of the electricity market and for restricting the state, essentially, to the role of a guarantor. The particular importance of using combined heat and power systems and renewable energies may be emphasized in § 2 par. 4 s. 2 EnWG, but, according to § 2 par. 5 EnWG, the commitment to purchase electricity from these and other renewable energies, and to feed it into the general supply grid, is left to another, dedicated act of parliament. The act granting priority to renewable energy sources62 (§ 1) states as its purpose the facilitation of a sustainable development of energy provision in the interest of climate and environmental protection. Here, the concept of sustainability is referred to explicitly. The intended instrument is to increase significantly the share of renewable energies in the provision of electricity so that the share of such energies in the total energy consumption is at least doubled by 2010, in compliance with the goals set for the European Union and Germany. To achieve this, the grid operators are put under obligation to purchase preferentially all the electric power offered from installations producing renewable energies, and to pay for it at fixed minimum rates significantly above the usual rates for conventional energies. The obligation covers hydroelectricity, wind power, solar radiation energy, geothermal energy, waste dump gases, sludge gas, coal mine gas and biomass. This supportive regulation entails various issues concerning European law with regard to the free movement of goods and the prohibition of state aid.63 4.1.6 Implementation in regional planning and mining law Regulating the exploitation of natural resources is another central element of a sustainable energy policy. Such regulation determines the resource stocks that will be left for future generations. Statutory stipulations in this respect follow from regional planning and mining law. The Regional Planning Act (Raumordnungsgesetz, ROG)64, especially, which also regulates the planning of locations where raw materials for the production of energy are exploited or where centers for regenerative energy production are to be established, is a particularly successful example of implementing the concept of sustainability. According to § 2 par. 2, it is subject to 62 63 64

Renewable energies act (Erneuerbare-Energien-Gesetz – EEG) promulgated as art. 1 of the aforementioned act of 2000-3-29, BGBl. I p. 305. See also chapter 6.3. Of 1997-8-18, BGBl. I p. 2081.

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the guiding concept of sustainable regional development, which reconciles the social and economic demands on land with its ecological functions and leads to a sustained order that is balanced over large areas. Hence, sustainable development, in terms of the Regional Planning Act, aims at balancing the ecological, economic and social functions of the land with the demands on the land. This means none of the three aspects per se is treated with preference a priori. The legislator thus rejected the demand that systems should be optimized in favor of one aspect. This guiding concept acts as the principal rule of interpretation and application. Accordingly, relevant and diverging interests (principles) have to be reconciled in keeping with the guiding concept. The eight component aspects detailed in § 1 par. 2 s. 2 ROG are meant to clarify this central guiding concept.65 The aspect cited under no. 1 demands that regional planning “ensures the right to personal self-fulfillment …with responsibility for future generations“. Accordingly, not only the present effects and risks for the functions of the entire territory of Germany and her regions must be considered, but also, and especially, the long-term effects and risks must be appreciated and taken into account when considering planning decisions. This becomes particularly clear in the case of exploiting mineral resources for energy production. The present consumption of non-regenerative resources reduces, or even excludes, possibilities for later generations to use the same resources. Thus, due to its long-term consequences, the use of non-renewable resources is fraught with questions especially with regard to long-term responsibility. For case constellations like this, in particular, the first component aspect of § 1 par. 2 s. 2 ROG gives grounds for the legal obligation of planners to take the interests of future generations into account when making planning decisions. Thus, according to this aspect, sustainable land development is to guarantee future land demands and land functions for generations to come. Conversely, the unhindered self-fulfillment of the present population, which includes the right to exploit resources, is assumed in § 1 par. 2 s. 2 no. 1 ROG. The issue is, hence, the limitation, not the total suppression of the extraction of natural resources, even if they are non-renewable. The extent of the necessary self-restriction derives from the circumstances of each individual case, which must be taken into account when making a considered planning decision. It cannot be laid down as a static entity, but must be determined dynamically, depending on the deposits presently available, the deposits that can be developed in the future, and the expected needs of present and future generations.66 The second aspect of § 1 par. 2 s. 2 ROG authorizes and obliges the state planning agencies to protect and develop the natural fundamentals of life; it thereby emphasizes the ecological dimension of the principle of sustainable regional planning. The assumption under § 1 par. 2 s. 2 no. 3 ROG – that the locational prerequisites for economic developments are created – makes clear that the legislatorial conception of a mandate to exercise precaution, as applied in regional planning law, cannot be interpreted as plainly prohibiting any degradation. The purpose is, rather, to reconcile the social, economic and ecological demands on the land, which should 65 66

According to the reasons given for the draft bill tabled by the German federal government, BRDrucks. 635/96, p. 40. More in Frenz, Sustainable Development durch Raumplanung, 2000, p. 152 ff.

4.1 Fundamental legal standards for a sustainable energy system

79

lead to a “sustained order that is balanced over large areas”. Another aspect to clarify the principle of sustainable development is the demand to create the locational prerequisites for economic developments. This mandate reflects the economic demands that humans place on the land.67 Thus, according to this legislatorial conception, the [preservation] of the natural, and the development of the “economic”, fundamentals of life are planning guidelines of equal rank. The fourth guideline stipulates that the “land use possibilities shall be kept open in the long term”. This guiding concept is designed to take into account the necessity of a long-term precautionary policy concerning land use. The concept of sustainability is also discernible in the Federal Mining Act (Bundesberggesetz, BBergG), which is the second piece of legislation relevant to the regulation of resource extraction. It regulates the exploitation of energy resources, in particular, such as coal and gas in Germany. Still, it does not refer openly to sustainability. Being a traditional field of legislation, mining law seems to be tailored exclusively to the needs of resource exploitation. However, this view is shortsighted. Ensuring the security of procurement for today is not the only standard to be met. Elements of sustainability already shine through in the purpose provision of § 1 BBergG. An inspection of the provisions regulating the extraction of natural resources also shows that these can be interpreted in the spirit of sustainable development.68 The purpose provision of § 1 BBergG, which acts as an interpretation rule, aims at a long-term, precautionary protection of resource deposits and takes account of a view guided by the intergenerational component of the concept of sustainability with regard to mining issues. The medium- to long-term security of natural resource procurement thus intended primarily comprises an economic and social component. The economical and sparing treatment of land and soil, demanded by § 1 no. 1 BBergG, takes up a point that is commonly regarded as a secondary aspect of the sustainability concept, which serves, above all, as a safeguard against the erosion of ecological interests. The present mining law also contains a number of “opening clauses”, through which issues external to mining law, especially those from environmental and planning law, flow into the approval and licensing process. The reference to “public interests” contrary to mining interests in numerous provisions of mining law requires a reconstructive balancing decision by the mining authority. In this way, the duty to manage conflicts through weighing conflicting interests against each other – which is inherent to sustainability – can be honored. 4.1.7 International obligations concerning energy security Presently, about 50% of the energy demands of the European Union are covered by imports; this corresponds to 6% of the total import volume. In geopolitical terms, ca. 45% of the oil imports originate from the Middle East; 40% of the natural gas 67 68

According to the brief reasoning for the bill presented by the federal government, BT-Drucks. 13/6392, p. 79. Details, also on the following, in Frenz, Bergrecht und Nachhaltige Entwicklung, 2001, p. 11 ff.

80

4 Towards a Sustainable Energy System

imports stem from Russia. By 2020 – according to a EU prognosis that assumes status-quo conditions – the import component will have risen (again) to 70% (KOM (2000) 769 fin.). Even more dramatic is the shift to renewed dependence on the Middle East, where about two thirds of future oil reserves are located (see fig. 4.4 below) and where, as estimated by the International Energy Agency (IEA), more than 85% of any additional production capacity is likely to be found. The reasons for this development are the extremely high costs of developing conventional and alternative oil resources outside OPEC (e.g. tar sands in Canada) and the still growing demand for oil. The latter, in turn, is caused by the fact that, by now, oil is used predominantly in an energy market growing particularly fast, i.e. the transport sector. The realization that mobility – a basic prerequisite of a work sharing, global economy – depends on the politically unstable Middle East may give rise to unease, but not to action (yet) to slow down the growth in the demand for oil in the transport sector. Most notably in the US, where gasoline consumption per 100 km is 2–3 liters higher than in Europe, hardly any effort appears to be made to reduce consumption, although energy imports will also continue to rise there – regardless of occasional attempts to increase energy autarky within NAFTA (see fig. 4.5 below). Only the International Energy Agency (IEA), founded in the aftermath of the first oil crisis of 1973/74, is concerned specifically with energy security, or the security of oil procurement, in particular. The original task of this international organization with, presently, 26 member states, is to develop joint measures to prevent bottlenecks in the supply of mineral oil. Accordingly, the member states have committed themselves to keep oil reserves corresponding to at least the net imports over 90 days of the preceding year. In addition to this, further rapid and flexible emergency measures (e.g. switching to other energy carriers, and programs for restricting demand and boosting production) are set out in the Coordinated Emergency Response Measures (CERM). In 1993, the ministers of the member states adopted the “Shared Goals”, in which the guiding principles are laid down: security of procurement, environmental protection and economic growth. Long-term security of procurement shall be ensured by – diversifying the energy systems, – increasing the efficiency of all types of energy, – flexibility, – restricting energy consumption – and promoting renewable energy carriers. The promotion of non-fossil energy sources is afforded a high priority. Research, development and market penetration as well as the transfer of new and improved technologies are regarded as necessary elements for achieving the goals. Apart from new, flexible solutions, reforms of regulation regimes are also to contribute. According to the IEA, the deregulation of the energy sector in the member states has already resulted in improved efficiencies and opened up new opportunities for innovation (IEA 2001b). The objectives of the EU concerning the energy sector – global competitiveness, security of procurement and environmental protection – are largely identical to those of the IEA. A debate began in the year 2000, when the Green Paper, “Towards

4.2 Evaluation of the global energy system under criteria of sustainability

81

a European Strategy for the Security of Energy Supply” (KOM (2000) 769 fin.) was published. Presently, the recommendations are under discussion. Binding provisions have not been formulated yet, but the following proposals were submitted: – Taxation as an instrument to control demand – Energy savings and diversification in the construction and transport sectors – Expansion of new and renewable energy carriers (Support through grants, tax reliefs and financial aids) – New import routes for mineral oil and gas, as well as increasing the reserves

4.2 Evaluation of the global energy system under criteria of sustainability All forms of sustainability imply handing over a certain potential for use to succeeding generations (chapter 2). The various definitions of sustainability (very weak to very strong sustainability) only differ in their interpretation of this potential. In the following, we assess the sustainability of the energy system by analyzing the present energy system in the context of different scenarios for the future, using the concept of critical sustainability, as defined in chapter 2, as a standard of reference. 4.2.1 Characteristics of the present energy system Through the last 50 years, commercial energy consumption has grown by a factor of 5 worldwide, to about 350 EJ69 per year (fig. A.1 in appendix 1), to which the non-commercial use of energy (firewood, biological waste etc.) has to be added. The World Resources Institute (WRI) cites an annual total (commercial and noncommercial) energy use of 380 EJ for the year 1997. In terms of continuous power, this corresponds to a global consumption of 12 Terawatt (TW)70 or ca. 2,100 watts per capita (fig. A.2, appendix 1). Today’s global energy system is based mainly on the non-renewable energy resources coal, mineral oil and natural gas, whose total share amounts to 83 % (95%) of the total (commercial) energy consumption (fig. A.2, appendix 1). Nuclear and hydroelectric power contribute 2.3% and 2.4%, respectively, to meeting the demand.71 New, regenerative energy sources such as solar energy, wind energy, geothermal energy and others, represent a marginal contribution of 0.4% in total. The largest non-fossil contribution to the energy system is provided by biomass, which stems mainly from non-commercial energy resources. The latter play an important, quite often the most important role especially in developing countries, even though they cause other, negative ecological side effects in many cases (e.g. deforestation and desertification). 69 70 71

EJ = 1018 joules. See chapter 2 (Box 1) for the definitions of energy units. Terawatt = 1012 watts; 1 watt = 1 joule per second. Hydroelectric and nuclear power are quantified here by means of the electricity produced, without the multiplicator 3 (the reciprocal of the average efficiency of thermal electricity production), which is used in some energy statistics.

4 Towards a Sustainable Energy System

82

Primary energy consumption in watts percapita

Share of non-commercial energy 10 0%

12 '0 00 90% 10 '0 00

75 % 8'00 0

47%

6'00 0

50 %

36% 4'00 0 23%

25 %

2'00 0 10%

6% 1%

1%

1%

0%

0%

1%

0

0% G lo ba l

Ind ust rial co un tri es

De velopi ng cou nt ries

U SA

Cana da Fra nce

UK Ge rma ny

Sw iss

Ch in a

Ind ia Ind on esia

Ban gl ad esh E thi o pi a

Fig. 4.1 Primary energy consumption, global and for selected regions and countries. Black bars: Primary energy consumption in Watt per capita in 1997. Hatched bars: Share of noncommercial energy in percent of the primary energy consumed in 1993 (global: 1997). Data sources: WRI (1997), WRI (2001), BP (2001).

Figure 4.1 confers an impression of the large global differentials in energy use between the poorest developing countries, e.g. Bangladesh (260 Watt/capita), and the richest industrial nations such as USA and Canada (more then 10,000 Watt/capita). The energy consumption per capita diverges by more than a factor of 40. Furthermore, when taking into account commercial energy only, this difference increases by at least another factor of 10. In the EU, the mean energy consumption per person is about 4,500 Watt (fig. B.1, appendix 1). In Germany, the primary energy consumption amounted to 5,100 Watt per person in 1997, of which the fossil energy carriers provide a share of 93.6%, compared to 4.6% coming from nuclear energy. With a share of less than 2%, renewable energies only make a marginal contribution to the primary energy consumed (fig. B.2, appendix 1).72 4.2.2 Prognoses for the development of the global energy system over the coming 100 years Various organizations and research institutes have produced forecasts for the development of energy demand up to the year 2100. Every single one predicts that the world population and the global gross domestic product (GDP) as well as the GDP per capita and the energy consumption per capita will grow significantly. The prognoses differ, predominantly, in their assumptions concerning the efficiency gains made in the use of energy, i.e. the decoupling of the rise in energy consumption 72

Umweltbundesamt (2001): In the list shown there, the share of nuclear energy is three times larger, since it is expressed as the overall heat produced by nuclear power plants. This value is roughly three times the electricity production.4

4.2 Evaluation of the global energy system under criteria of sustainability

83

from economic and population growth, and with respect to the role of the so-called renewable energies (mainly solar energy in all its variations) as well as regarding population growth. A selection of such models is presented in section C of appendix 1 (box 1 and 2, tab. C.1), where six scenarios, developed by the International Institute for Applied Systems Analysis and the World Energy Council (IIASA/WEC scenarios) and representing the typical variation width of such models, are compared (app. 1, fig. C.1 to C.7). The analysis that follows is based on the IIASA/ WEC B scenario, which is in the middle portion of the distribution; it assumes average economic growth and technological development and does not take into account any explicit climate protection measures. Apart from decoupling economic growth from energy consumption, decarbonization (decoupling of CO2 emissions from energy consumption) - through replacing fossil energy sources with renewable and nuclear energies or by sequestering carbon dioxide in the oceans or in the geological subsoil - plays a central role. Focusing on CO2 in the energy sector is reasonable because carbon dioxide amounts Box 4.1: Relationships between the rates of change in global energy demand, global atmospheric CO2 emissions and CO2 intensity A. The total, global energy demand per year (E) can be expressed as: 0, eww < 0, eu > 0, euu < 0, euw > 0.

234

Appendix1

increase in energy prices pushes up the labor demand. Decreasing energy consumption shifts the labor demand curve downward. A labor tax reduction moves the wage setting curve downward. Scholz showed that the budget implications of a positive relationship between wage taxes and public expenditure necessitates that energy input must fall and unemployment must increase where Beta is of a high value. From the defining equations for employment, ax=E and bx=L, with a and b as factor input coefficients and the usual definition of the substitution elasticity, m = - ,ln(b/a)/,ln(p/w)= - 1/(l -1) > 0, one obtains the growth rates:

A comparison with the preceding equation shows that the effort e is kept constant. This too, shows that the volume of employment crucially depends on whether the reduction of employment due to a reduced use of energy is overcompensated by the impact of the factor price changes and substitution possibilities. The factor price changes are interdependent. From the zero-profit condition, it can be derived that:

Fig. 1 1 Figure

w

L

The terms theta represent the cost components due to labor and energy-related emissions, respectively. By substituting this equation in the preceding one and then substituting the wage setting function for the growth rate of w and the defi^ nition L = –¡u^ , with ¡ = u/(1-u), for the growth rate of L, before resolving the resulting equation for the growth rate of u, one obtains:

Appendix 2

235

This represents a linearly increasing percentage change of the unemployment rate as a function of the percentage change of the tax factor T. With the energy input and emissions decreasing, this function has a constant positive value on the vertical axis and a negative value on the horizontal axis (see figure 2). This curve is the result of expressing the labor-demand and wage setting functions in terms of growth rates, including the zero-profit condition and the condition of exogenously falling energy emissions. Thus, this represents a consideration of the labor market equilibrium independent of any public budget. Consequently, figure 2 shows the unemployment rate required for any exogenous change in taxation, if the labor market equilibrium is to be secured, or, vice versa, the tax change required for any given rate of unemployment so that the unemployment rate remains compatible with setting the efficiency wage.

Fig. 2

Figure 2 shows three possible constellations. The extreme left side of the graph represents the situation expected by advocates of an energy tax. The rate of change of the unemployment rate is negative, since the impact of the tax reduction is strong enough to encourage low wage settlements. However, if the tax reduction does not have such a strong impact, the result is growing unemployment. Consequently, even if one shifts the wage setting function in figure 1 further towards the bottom right corner, one obtains a weaker labor demand, which is why the demand function must be further towards the bottom left corner. Apparently, the effect of a reduced energy input is dominant here. Even a tax increase (right edge of figure 2) is guaranteed to lead to higher unemployment. At this point, the central question is what rates of change result for taxes and unemployment if public budgets are taken into account. The assumption is constant state expenditure G= (1-1/T)wL + pE. Scholz (1998) considers the reduced form of the complete model and deduces three crucial results:

236

Appendix

where DET={`u (1-o) eL -¡eE - ¡oeL}/s is the determinant of the reduced form of the model, _= o¡ -(1-o)`u, o = 1-1/T, and s the share of state spending in the output x. Starting from there, Scholz shows further that Schneider has not only assumed _>0, but also, implicitly, DET < 0. He points out that, in his opinion that is not the usual approach in financial science. It is unclear why this should be the case. The connection between DET and _, which, after all, are composed of the same parameters, also remains unexplained. In the following, we will clarify this connection, in order to demonstrate that the success of a green tax reform crucially depends on the slope of the wage curve, w(u). An inspection of the definitions of DET and _ shows that:

The right-hand sides of these inequality relations show that the quotient in the upper condition for `u is greater than the the quotient in the condition in the second line, because in the former something is added to ¡o in the numerator. Consequently, one has to distinguish three cases:

Increasing energy taxes reduces energy emissions, but it also increases unemployment. Out of the three effects considered in connection with figure 1, the reduction in labor demand due to the reduced energy input is the strongest, if the budget context is taken into account. The main reason for this is that a steep wage curve that is shifted downward has little effect on the employment figures. The same is true for energy price increases with a substitution elasticity of less than parity. The additional revenue from an income tax reduction is negative.

Appendix 2

237

An energy (emissions) tax, which leads to a reduction of labor taxes and wages, is good for employment, but it also increases energy consumption and emissions. Out of the three effects expected in connection with figure 1, the one which reduces the labor demand, does not apply at all. The additional revenue from the income tax reduction is positive because the growth of employment, and hence the taxable base, will overcompensate the fall in wages.

This is the case of a very flat labor supply or wage curve. The employment effect is strong while the wage reduction is minor. As a result, the energy tax discourages the use of energy. Only in this last case is green tax reform successful. Thus, if a politician wants to know whether he would increase or decrease unemployment by introducing an energy tax, he must know the value of Beta in relation to the other factors. This will be difficult for three reasons: Firstly, the wage curve features in the model, instead of the usual labor supply function. Based on empirical studies, supply curves are expected to be very steep. Bovenberg (1995) states that a 1%-increase in the wage rate leads to a 0.02%increase in the labor supply. The result is a nearly vertical function similar to an exogenous labor supply. If the wage setting function enters the model instead of a labor supply function, the question is if this function can look very different from a labor supply function. Independent of the model, the structural equations, which have to be estimated, are always very similar (Pissarides 1998). This would suggest a very high value of Beta and hence an increase in unemployment, which can still be optimal because it would result in an improved environment (Schneider 1997, section IV). Since opinion polls, which are held in such high regard by politicians, show a high priority for employment, it must be doubted if voters and politicians would realize the utility function behind such a result (Böhringer and Vogt 2001). Therefore, it is no surprise that calls for a green tax reform are derived, predominantly, from models involving fixed wages and hence a horizontal labor supply curve (see e.g. Nielsen et al. 1995 and Koskela et al. 2001)2 – and from negotiation models, in which the workforce gets a better deal (see chap 6.2.1). Secondly, the term _ = –` /T+(1–1/T)¡ must be positive. In this expression, 1/T is the percentage kept by the employee. Graafland and Huizinga (1999) estimate a similar equation, albeit derived from a negotiation model, and obtain semi-elasticities (- ,w/w/,u) between 1.5 for the second half of the 1970s and 3.0 for the beginning of the 1990s. To make these comparable with Beta, the semi-elasticity can be multiplied by the unemployment rates at the given time, i.e. the first figure with u=5% and the second with u=10%. This yields values of 0.075 and 0.3 respectively. 2

Still, in their model, too, an ecological tax reform increases employment only if the tax on the labor input is higher than that on the energy input. If one includes a profits tax in the model, an ecological tax reform increases (decreases) employment if the the profits tax is low (high) (Boeters 2001). The type of model considered here neither includes any interesting labor market contributions nor does it take into account free access to the goods market or any relevant arguments for access barriers.

238

Appendix

The higher the unemployment rate, the higher the elasticity. This distinguishes this method from the usual ones, which apply constant elasticities. In figures 3 and 4, two planes are displayed in each case. The flatter plane represents the comparative value of Beta, as derived from the Graafland-Huizinga semi-elasticities. The bent plane shows, on the vertical axis, the values for the right-hand side of the relation `u < u(T–1)(1–u) = – ` for alternative values of the unemployment rate and the percentage t=1/T of the gross wage kept by the worker. The lower this percentage and the higher the unemployment rate, the larger becomes the value on the right-hand side of the relation. If the elasticity is as high as `u = 0.3, the tax factor t=1/T left to the employees must be very small ( 0, the pollution can only decrease if the condition dh = (,h/,N)dN + (,h/,z)dz < 0, hence (,h/,N)dN< - (,h/,z)dz is fulfilled. Dividing both sides by h and multiplying the left (right) side with N/N (z/z) yields:

3

The other sections concern subsidies for the production volume and for the effort made not only for the environment (represented by z in the text above), but also in the production area (y, with dy = - dz). As a rule, production subsidies are less efficient with regard to employment (also see Strand 1996, section 5). The conditions remain as restrictive even if the measures in favor of the environment are in competition with the measures concerning output (Strand 1996, section 3).

Appendix 2

239

The percentage change of z and its elasticity in relation to the pollution h must exceed the percentage change of employment and its elasticity in relation to pollution. Otherwise, the pollution can only be reduced by a reduction in the employment volume. This follows already from an inspection of specified functions. If we include the relationship between efficiency wage, profit maximization and benefit maximization through a dual government decision, we obtain the elasticity conditions for increasing employment: -hzNN/hz > 1 and ¡hN * ¡fN, which can be interpreted the following way: An increase in employment requires that the elasticity of hz in relation to N must be more than equal and that the increase in employment boosts the output by a larger degree than it worsens pollution. Thus, two conditions must be fulfilled, if not only pollution, but also employment is to be increased. Again, a politician would have to trust certain estimates – provided there are any estimates that result in the values required for the relevant parameters.

A.2.2 Elasticity issues in negotiation models Holmlund and Kolm (2000) extended a negotiation model with monopolistic competition and a constant number of enterprises by including a sector of non-tradable goods. The profits are subject to negotiation and the energy is imported. The introduction of an energy tax has no direct effect on employment in the non-tradable goods sector, whereas the labor demand falls in the tradable goods sector. The wage reduction thus triggered boosts employment in the non-tradable goods sector. If the negotiating power and the wages are at exactly the same level in both sectors, the total employment effect is zero, provided the technologies are of the Cobb-Douglas type. If the wages are higher (lower) in the tradable goods sector, the employment effect is positive (negative), since labor migrates to the sector where the trade unions have less negotiating power. In the case of a CES technology with a substitution elasticity below (above) parity, on the other hand, the employment effect is

4

beta 2

0 0

0 0.2

0.05

0.4 t 0.6

0.1

0.8 1

u

0.15

Fig. 3 High levels of unemployment and taxation allow a double dividend if the wage curve has a low elasticity (0.075).

Appendix

240

negative (positive) for symmetric sectors, because the wage reduction leads to a slight (heavy) increase in the labor demand in the non-tradable goods sector. Empirical estimates do not allow any clear conclusion concerning the value of the substitution elasticity. 4 3 beta 2 1 0 0

0 0.02

0.2

0.04 0.4 t 0.6

0.1 0.8

0.06 0.08 u

0.12 1

0.14

Fig. 4 Only a very high unemployment rate and a very high tax factor allow a double dividend if the wage curve has an elasticity of 0.3.

Appendix 3 Energy-relevant science and technology policies of the European Union – an overview1

A.3.1 Importance and integration of sustainability aspects in European energy policies All three dimensions of a sustainable development are monitored in the context of the annual spring sessions of the European Council, where they are inspected with regard to the extent of their integration in European policies. At the spring session in Barcelona in March 2002, for instance, the European Council examined the progress of the integration of the goals of a sustainable development in the Lisbon Strategy, and assessed the contribution that can be made by the environmental technology sector to the promotion of growth and employment. As a result, the Council recognized the need for further action. Investments in science and future technologies are thought to be of crucial importance, because without such investments an adaptation towards sustainable developments would have to be achieved, to a larger extent, by changing consumers’ behavior. New technologies can be developed through support for innovations. Therefore, the EU and its member states must ensure that the creation of framework conditions that favor innovations (i.e. providing a regulatory push) takes a central role in shaping their policies in order to stimulate the forces that drive innovation: the growth of scientific knowledge (science push) and the growth of demand (market pull). Public finance support for the technological transformation must focus on basic research (far from the market) and applied research in the area of safe and environmentally sound technologies as well as on benchmarking and demonstration projects in order to accelerate the creation or introduction of new, clean and safe technologies. In the same context, the European Commission refers to the energy sector, and the promotion of research and technological development (RTD) in this sector, as a central area of present and future policies to implement measures against climate change and increased use of clean, safe and renewable energies. According to the Green Paper published in November 2000, “Towards a European Strategy for the Security of Energy Supply”, the objective is to ensure the safe, inexpensive and environmentally compatible procurement of energy while maintaining the economic competitiveness of the European energy market. Against the background of the ca. 50% of the demand currently met by energy imports and the CO2 reduction 1

The EU documents discussed in this chapter can be found at http://europa.eu.int/index_de.htm.

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Appendix

requirements arising from the Kyoto Protocol of 1997, the security of energy procurement and its environmental dimension are becoming increasingly important.

A.3.2 Overview of energy-relevant RTD programs of the European Union The energy-relevant RTD programs of the European Union can be subdivided into five categories. In the following, we will focus on parts of the first three of those: 1. Energy Framework Program (1998-2002) comprising six specific agendas: – ALTENER (Specific Actions for Greater Penetration of Renewable Energy Sources), – SAVE (Specific Actions for Vigorous Energy Efficiency): Energy efficiency/savings, – ETAP (studies, analyses and prognoses for energy markets), – SYNERGY (international co-operation in the area of energy policy), – CARNOT (clean technologies for solid fuels), – SURE (safety, transport, co-operation in the area of nuclear energy); 2. The European Climate Change Program (ECCP; KOM (2000) 88 fin.) 3. The 6th Framework Program for Research, Technological Development and Demonstration Activities (2002-2006); 4. Third state programs: INCO, PHARE, TACIS; 5. Part of the structure programs: e.g. INTERREG, RECHAR. Framework program for activities in the energy sector (1998-2002)2, especially: ALTENER/SAVE To achieve the strategic objectives of security of procurement, competitiveness and environmental compatibility, the Commission has formulated Community initiatives, centered on the “Framework Program for Activities in the Energy Sector” (1998-2002), for optimizing the transparency, coherence and coordination of all Community activities in the energy sector. While the RTD programs within the 5th/6th Framework Program for Research, Technological Development and Demonstration Activities and the support possibilities under the structure programs, e.g. INTERREG, are equipped with considerable budgets, the “policy programs” ALTENER and SAVE are funded much less lavishly. Among the reasons for this situation is, certainly, that these programs are not technology-orientated; they are intended to identify the legal, administrative and institutional impediments to an accelerated market penetration of efficient and innovative technologies and, ultimately, remove them by political means. In this way, ALTENER und SAVE are supplemental to the technology programs of the EU. They start from where technology support programs usually lose their leverage, i.e. at the point of developing and evaluating activities to remove those impediments that still hinder the market penetration of technically proven, clean and efficient technologies. 2

up-to-date details at http://europa.eu.int/comm/energy/en/pfs_4_en.html.

Appendix 3

243

Consequently, they do not involve investment subsidies in the narrow sense of the term. – The programs are composed of four parts: – Legislative measures at the Community level, – studies to support the work of the European Commission, – financial support programs for assisting the member states in removing legal and administrative obstacles and information deficits of the relevant target groups, and – activities in support of information exchange (information networks, databases). In its approach, the SAVE program addresses the energy demand side (rational use of energy, RUE) and ALTENER the energy supply side (renewable energy sources, RES). This pragmatic dichotomy dissolves as “investments in RES should always be preceded or accompanied by a demand management plan and/or by investing in RUE, since energy from RES should not be wasted through inefficient demand side/end user equipment, appliance and systems”3. Therefore, against the background of experience gained in 2001 and 2002, especially such projects that integrate SAVE und ALTENER (“integrated actions on RUE and RES”) are to be supported financially. The European Climate Change program (ECCP)4 The ECCP was conceived to include every important interest group in the preparations for joint, coordinated policies and measures to meet the emission reduction requirements arising from the Kyoto Protocol (KOM (2000), 88 fin.). The ECCP focuses on measures in the areas of general issues, energy, transport and industry. The proposed catalogue of measures takes into account, supports and supplements the efforts to integrate environmental issues with other policy areas. “The ECCP also confirms the need to continue research in the areas of climate protection, technological development and innovation” (KOM (2001) 580 fin.). For instance, it recommends emphatically making better use of, and also further developing the existing IPPC (Integrated Pollution Prevention and Control Directive 96/61/EC) guidelines with regard to generic energy-saving technologies and of state of the art applications, continuously updated in technological reference documents5 and representing IPPC obligations concerning energy savings. Furthermore, it deals with issues of residential and industrial energy consumption (minimum efficiency requirements, energy demand management, promotion of nuclear power plants) as well as with a number of activities in accordance with the White Paper on a European Transport Policy (KOM (2001) 370). The 5th Framework Program for Research, Technological Development and Demonstration Activities (1998-2002) One of the four top priorities cited in the 5th Framework Program for Research, Technological Development and Demonstration Activities (1998-2002) is activi-

3 4 5

European Commission, DG Energy & Transport (2002), p. 4. Up-to-date details at http://europa.eu.int/comm/environment/climat/eccp.htm. BREFs (BAT Reference Documents).

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ties concerning “energy, environment and sustainable development (EESD)”, which was budgeted with € 2.125 bil. The EESD was again subdivided into the action fields “energy“ (€ 1.042 bil.) and “environment and sustainable development“ (€ 1.083 bil.). The 6th Framework Program for Research, Technological Development and Demonstration Activities (2002–2006)6 Early in 2000 Philippe Busquin, the EU Commissioner responsible for research, presented a visionary concept for a European Research Area (ERA, see KOM (2000) 6), which highlighted many important areas where the EU is lagging behind its main competitors, the USA and Japan: In the present situation, there are “15 plus 1 research policies” – those of the member states and those of the European Commission –, which often act in parallel and with little coordination. The EC Treaty, on the other hand, provides (in Art. 165) the express possibility that “Member States coordinate their research and technological development activities so as to ensure that national policies and Community policy are mutually consistent”. However, this has hardly been put into practice yet (EVA 2001). The ideas presented with the 6th RTD framework program go far beyond the structure and instrumentation of the 5th Framework Program. The concept of a European Research Area shows an innovative way towards a European “internal market for research”. It was thoroughly discussed in the European Parliament, in the Council and also in the European Council of heads of states and governments and met with agreement in principle. The measures under this sixth RTD framework program are carried out in accordance with general objectives such as strengthening the scientific and technological bases of (European) industry and developing its competitiveness. To facilitate the achievement of these goals, the EC framework program (total budget ca. € 16.27 bil.) is structured around three main priorities: – Integration of research (€ 13.8 bil.), – Shaping the European Research Area (€ 2.605 bil), and – Strengthening the foundations of the European Research Area (€ 320 mil.). The first point, “integration of research”, which is to bring together, and thus pre-structure, the research efforts and activities in seven priority areas, seems to be of particular relevance. Energy-related research and development shall be given “appropriate priority” in this context as, according to the European Council of Gothenburg, global changes, the security of energy procurement, sustainability in matters of transport, the sustainable use of Europe’s natural resources and the interactions with human activities are of central interest. The measures to be taken in this priority area aim at boosting the scientific and technological capacities required in Europe for realizing a short and long term sustainable development, including and taking into account the ecological, economic and social dimensions. These activities shall represent a comprehensive contribution to the international efforts of softening or even reversing present negative trends and shall help to preserve the equilibrium of ecosystems. 6

Up-to-date details at http://europa.eu.int/comm/research/nfp.html and www.eva.ac.at.

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The 6th framework program provides, as a central element, seven “thematic priority areas of research”. The contents and instruments are formulated in quite some detail in the so-called “specific programs”, where the area “non-nuclear energy” is mainly subsumed in the thematic area “sustainable development, global change and ecosystems”. This area consists of the subprograms – sustainable energy systems, – sustainable surface transport and – global change and ecosystems. It is equipped with a total budget of € 2.120 bil. € 810 mil. is earmarked for the sub-program “sustainable energy systems” for the total life span of the program (4 years), and € 610 mil. for “sustainable surface transport”.

A.3.3 The research priorities “Energy” and “Transport” in the 6th RTD framework program The text of the actual (changed) proposal of the Commission concerning the specific programs (KOM (2002) 43) is presented in the sections “sustainable energy systems” and “sustainable surface transport” below. A.3.3.1 Sustainable energy systems The purpose of strategic objectives is to address the reduction of greenhouse gases and pollutant emissions, the security of energy supply, the increased use of renewable energy as well as to achieve an enhanced competitiveness of European industry. Achieving these objectives in the short-term requires a large-scale research effort to encourage the deployment of technologies already under development and to help promote changes in energy demand patterns and consumption behavior by improving energy efficiency and integrating renewable energy into the energy system. The longer-term implementation of sustainable development also requires an important RTD effort to ensure the economically attractive availability of energy, and overcome the potential barriers to adoption of renewable energy sources and new carriers and technologies such as hydrogen and fuel cells that are intrinsically clean. Research priorities Research activities having an impact in the short- and medium-term

Community RTD activity is one of the main instruments which can serve to support the implementation of new legislative instruments in the field of energy and to change significantly current unsustainable patterns of development, (which are characterized by growing dependence on imported fossil fuels, continually rising energy demand, increasing congestion of transport systems, and growing CO2 emissions), by offering new technological solutions which could positively influence consumer/user behavior, especially in the urban environment. The goal is to bring innovative and cost-competitive technological solutions to the market as quickly as possible through demonstration and other research actions aimed at the market,

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which involve consumers/users in pilot environments, and which address not only technical but also organizational, institutional, financial and social issues. Clean energy, in particular renewable energy sources and their integration in the energy system, including storage, distribution and use

The aim is to bring to the market improved renewable energy technologies and to integrate renewable energy into networks and supply chains, for example by supporting stakeholders who are committed to establishing ‘sustainable communities’ employing a high percentage of renewable energy supplies. Such actions will adopt innovative or improved technical and/or socio-economic approaches to ‘green electricity’, heat, or bio-fuels and their integration into energy distribution networks or supply chains, including combinations with conventional large-scale energy distribution. “Research will focus on: the increased cost-effectiveness, performance and reliability of the main new and renewable energy sources; integration of renewable energy and the effective combination of decentralized sources, with cleaner conventional large-scale generation; validation of new concepts for energy storage, distribution and use.” Energy savings and energy-efficiency, including those to be achieved through the use of renewable energy sources

The overall objective is to reduce the demand for energy by 18 % by the year 2010 in order to contribute to meeting the EU’s commitments to combat climate change and to improve the security of energy procurement. Research activities will focus in particular on environmentally sound building to generate energy savings and improve environmental quality as well as the quality of life for their occupants. Activities in the area of “polyvalent” energy production will contribute to the Community target of increasing the share of combined heat and power systems (CHP) in EU electricity generation from 9% to 18% by 2010, and will help to improve the efficiency of the combined production of electricity, heating and cooling services, by using new technologies such as fuel cells and integrating renewable energy sources. “Research will focus on: improving savings and efficiency mainly in the urban context, in particular in buildings, through the optimization and validation of new concepts and technologies, including combined heat and power and district heating/cooling systems; opportunities offered by on-site production and the use of renewable energy to improve energy efficiency in buildings.” Alternative motor fuels

The Commission has set an ambitious target of a 20 % substitution of diesel and gasoline fuels by alternative fuels in the road transport sector by the year 2020. The aim is to improve the security of energy supply through reduced dependence on imported liquid hydrocarbons and to address the problem of greenhouse gas emissions from transport. In line with the Communication on alternative fuels for road transportation, short-term RTD will concentrate on three types of alternative motor fuels that could potentially reach a significant market share: bio-fuels, natural gas and hydrogen. “Research will focus on: the integration of alternative motor fuels into the transport system, particularly into clean urban transport; the cost-effective and safe production, storage, and distribution (including fueling infrastructure) of alternative

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motor fuels; the optimal utilization of alternative fuels in new concepts of energyefficient vehicles; strategies and tools to manage the market transformation process for alternative motor fuels.“ Research activities having an impact in the medium- and long-term

The medium- and longer-term objective is to develop new and renewable energy sources, and new energy carriers such as hydrogen, which are both affordable and clean and which can be well integrated in a long-term sustainable energy supply and demand context both for stationary and for transport applications. Furthermore the continuing use of fossil fuels in the foreseeable future requires cost-effective solutions for the disposal of CO2. The goal is to bring about a further reduction in greenhouse gas emissions beyond the Kyoto deadline of 2010. The future large-scale development of these technologies will depend on a significant improvement in their cost and other aspects of competitiveness against conventional energy sources, within the overall socio-economic and institutional context in which they are deployed. Fuel cells, including their applications:

These represent an emerging technology which is expected, in the longer term, to replace a large part of the current combustion systems in industry, buildings and road transport, as they offer higher energy-efficiency, lower pollution levels and a potential for lower cost. The long- term cost target is 50 €/kW for road transport and 300 €/kW for high-durability stationary applications and fuel cells/electrolyzers. “Research will focus on: cost reduction in fuel cell production and in applications for buildings, transport and decentralized electricity production; advanced materials related to low and high temperature fuel cells for the above applications.” New technologies for energy carriers/transport and storage, in particular hydrogen:

The aim is to develop new concepts for long term sustainable energy supply where hydrogen and clean electricity are seen as major energy carriers. For H2, the means must be developed to ensure its safe use at an equivalent cost to that of conventional fuels. For electricity, decentralized, new and in particular renewable energy resources, must be optimally integrated, within inter-connected European, regional and local distribution networks to provide secure and reliable high quality supply. “Research will focus on: Clean, cost-effective production of hydrogen; hydrogen infrastructure including transport, distribution, storage and utilization; for electricity the focus will be on new concepts, for analysis, planning, control and supervision of electricity supply and distribution and on enabling technologies, for storage, interactive transmission and distribution networks.” New and advanced concepts in renewable energy technologies:

Renewable energy technologies have, in the long-term, the potential to make a large contribution to the world and EU energy supply. The focus will be on technologies with a significant future energy potential and requiring long-term research, by means of actions with high European added value in particular to overcome the major bottleneck of high investment costs, and to make these technologies competitive with conventional fuels. “Research will focus on: for photovoltaic: the whole production chain from basic material to the PV system, as well as on the integration of PV in habitat and large-

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scale MW-size PV systems for the production of electricity. For biomass, barriers in the biomass supply-use chain will be addressed in the following areas: production, combustion technologies, gasification technologies for electricity and H2/syngas production and bio-fuels for transport. For other areas the effort will be focused on integrating at European level specific aspects of RTD activities which require longterm research.“ Capture and sequestration of CO2, associated with cleaner fossil fuel plants:

Cost-effective capture and sequestration of CO2 is essential to include the use of fossil fuels in a sustainable energy supply scenario, reducing costs to the order of € 30 in the medium-term and € 20 or less in the longer-term per metric tonne of CO2 for capture rates above 90 %. “Research will focus on: developing holistic approaches to near zero emission fossil fuel based energy conversion systems, low cost CO2 separation systems, both pre-combustion and post-combustion as well as oxy-fuel and novel concepts: development of safe, cost-efficient and environmentally compatible CO2 disposal options, in particular geological storage, and exploratory actions for assessing the potential of chemical storage.” A.3.3.2 Sustainable Surface Transport The White Paper: ‘European transport policy for 2010: time to decide’ forecasts a transport demand growth by 2010 in the European Union of 38 % for freight and 24 % for passenger transport (base-year 1998). The already congested transport networks will have to absorb the additional traffic, and the trend suggests that the proportion absorbed by the less sustainable modes is likely to grow. The objective is consequently both to fight against congestion and to decelerate or even reverse these trends regarding the modal split by better integrating and rebalancing the different transport modes, improving their safety, performance and efficiency, minimizing their impact on the environment and ensuring the development of a genuinely sustainable European transport system, while supporting European industry’s competitiveness in the production and operation of transport means and systems. Research priorities

The objective is to reduce the contribution of surface transport (rail, road, waterborne) to CO2 production and other emissions including noise, while increasing safety, comfort, quality, cost-effectiveness and energy-efficiency of vehicles and vessels. Emphasis will be given to clean urban transport and rational use of the car in the city; new technologies and concepts for all surface transport modes (road, rail and waterborne); advanced design and production techniques. Making surface transport safer, more effective and more competitive: The objectives are to assure the transport of passengers and freight, taking into account transport demand and the need for rebalancing transport modes, while increasing transport safety in line with the 2010 objectives for European transport policy; rebalancing and integrating different transport modes; increasing road, rail and waterborne safety and avoiding traffic congestion.

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A.3.4 Specific programs and instruments The 6th RTD framework program, of which extracts are presented above, is to be implemented through specific programs (KOM (2001) 279 and KOM (2002) 43). Each of these programs is characterized by the type of instruments used in accordance with the objectives and organization of the framework program. The specific program “Integrating and Strengthening the European Research Area” with its two indirect activities, “focusing and integrating Community research” and “strengthening the foundations of the European Research Area” embraces the research and coordination activities. “Networks of excellence” and “integrated projects” are the new instruments to be applied with priority, where a smooth transition from the traditional instruments to the new ones is to be guaranteed. With the introduction of the new instruments, which were welcomed by the Council and the European Parliament in their resolutions on the European Research Area, the necessity was acknowledged that the forms of Community support for research had to be developed further. The “integrated projects” instrument is meant to strengthen the competitiveness of the Community or to contribute to the solution of important social problems by mobilizing a critical mass of resources and competencies in research and technological development. Each integrated project is tailored to concrete scientific and technological goals and should produce specific results, e.g. products, processes or services. “Networks of excellence” are intended to expand the outstanding scientific and technological capacities in Europe by means of a gradual integration of the research capacities that already exist or are emerging on the national or regional level. The objective of each network will be to enhance the level of knowledge in a certain area by building up a certain critical mass of skills. Networks of excellence support co-operation between the outstanding capacities existing at universities, in enterprises (both SMEs and large corporations) and in scientific-technological organizations. These activities, which often cover a number of different disciplines, are oriented to long-term objectives; they are not guided by predefined, specific results in the form of products, processes or services.

A.3.5 Conclusion and outlook The proposal of the Commission concerning the 6th framework program (20022006) is strongly guided by the idea of an ERA. As the most important RTD-relevant activity provided for in the EC Treaty, the 6th framework program will also be the most important instrument for implementing the ERA. The new framework program is based on the following principles: – Focusing on a Union-wide approach offering the maximum added value for Europe. – Devising the various activities so that they have a stronger structuring effect on the research done in Europe; this should be achieved through creating closer

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links between the national and regional initiatives as well as with other European initiatives. – Simplifying and streamlining the rules of implementation by applying the newly defined forms of support and the planned, decentralized methods of administration. The proposal suggested a total budget of € 17.5 billion Euros, of which 1.23 billion were set aside for the EURATOM component and only 810 million for the nonnuclear energy sector. Thus, the negotiations led to an expansion of the budget compared to the 4th and 5th research framework programs, albeit on a very low level (see figure 1 and chapter 6.4):

20,0%

non-nuclear EURATOM

17,9%

18, 0% 15,4%

16,0% 14,0% 12, 0%

11,5%

10, 6%

11,7%

10,0% 8,0% 6,0%

7,8% 7,0%

4,0% 3,6%

2,0%

4,0%

4,6%

0,0% 4. FP (1994-1998) 5. FP (1998-2002)

EURATOM 6. FP (2002-2006) EC 2001/11/29

6. RP (2002- 2006) 1st reading EP

non-nuclear 6. RP Council 2001/12/10

Fig. 1 Budget share of the energy sector as a percentage of the total budget of the framework program Source: EVA (2001), p. 12; own illustration

The commission assumed rapid progress in its decision process concerning the specific programs and expected, following the adoption of the framework programs on June 3, 2002, (8800/02 (press 132), 2,431st session of the Council), the adoption of the action programs concerning the specific (implementation) programs and a first deployment of funds by December 2002.

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List of abbreviations Art BAT GDP BMBF BREF’s CDM CHP CO2 COP’s c.p. ECCP EC EU ECJ FAO GATT GEF GGE GW IEA IIASA IPCC IPPC ICT LCA NGO OECD R&D RTD SME SRU TW UNDP UNEP UNESCO UNIDO UNFCCC UWG WBGU WCED WEC WRI WTO 1 2 3 4

Article Best available technology Gross domestic product Bundesministerium für Bildung und Forschung1 BAT reference documents Clean Development Mechanism Combined heat and power generation Carbon dioxide Conferences of the parties ceteris paribus European Climate Change Programme European Community European Union European Court of Justice Food and Agriculture Organization of the United Nations General Agreement on Tariffs and Trade Global Environment Facility Greenhouse gas emissions Gigawatt International Energy Agency International Institute for Applied Systems Analysis Intergovernmental Panel on Climate Change Integrated Pollution Prevention and Control Directive Information and communication technology Life cycle assessment Non-governmental organization Organization for Economic Co-operation and Development Research and development Research and technological development Small and medium-sized enterprises Sachverständigenrat für Umweltfragen2 Terawatt United Nations Development Programme United Nations Environment Programme United Nations Educational, Scientific and Cultural Organization United Nations Industrial Development Organization United Nations Framework Convention on Climate Change Gesetz gegen unlauteren Wettbewerb3 Wissenschaftlicher Beirat Globale Umweltveränderungen4 World Commission on Environment and Development World Energy Council World Resources Institute World Trade Organization

Federal Ministry for Education and Research (Germany). Council of experts on the environment (Germany). German law against unfair competition. Scientific advisory council on global changes of the environment (Germany).

List of Authors

Achterberg, Wouter, Dr. phil. † 16. June 2002. Studied philosophy at Amsterdam University. Lecturer in ethics and political philosophy at Amsterdam University from 1972. 1986: Doctoral thesis “Partners in de natuur”. 1991–2002: “Sokrates” Professor (sponsored by the humanistic foundation of the same name) at the University of Wageningen. Main research interests: Ethics and political philosophy, especially the ethical and metaphysical foundations of an environmental philosophy. Blok, Kornelis, Professor Dr., studied physics at Utrecht. Doctorate 1991, thesis: ‘On the Reduction of Carbon Dioxide Emissions’. Professor of “Science and Society” at Utrecht University. Director of Ecofys, the energy and environmental consultancy. Main body of work on the: Development of energy technology, technology and politics. Lead author at the Intergovernmental Panel on Climate Change (IPCC). Address: University of Utrecht, Vakgroep Natuurwetenschap en Samenleving, Padualaan 14, 3584 CH Utrecht, The Netherlands. Bode, Henning, studied law at Bonn University. 1999–2001: Research Associate with the teaching and research department for mining law and environmental law at RWTH Aachen under Professor Dr. Walter Frenz (see below). Main research areas: Regional planning law, energy law and soil protection law. Address: Hauptstraße 11, D-56412 Girod. Frenz, Walter, Professor Dr. jur., born 1965, studied law and politics at Würzburg, Caen and Munich; 1994–1996: Research assistant at the University of Münster and professor of German (public) law at the university of Nijmegen; since 1997 Professor of mining law and environmental law at RWTH Aachen; major work also in the areas of energy law, European law and fiscal law. Address: Lehr- und Forschungsgebiet Berg- und Umweltrecht der RWTH Aachen, Wüllnerstraße 2, D-52062 Aachen. Gather, Corinna, Dipl.-Vwl., studied at the University of Cologne and the FU Berlin; 1986–1989: Statistisches Landesamt Berlin; 1989–2000: Staff and board member at the environmental consultancies Umweltberatungsstelle e.V. and KOFIRM e.V. in Berlin; since 2000: Research work at the chair of Prof. Steger at the TU Berlin. Main interests: Deregulation of the energy markets, improving the energy efficiency in private households. Address: Institut für Technologie und Management, Hardenbergstr. 4-5, D-10623 Berlin.

266

List of Authors

Hanekamp, Gerd, Dr. phil. Dipl.-Chem., studied chemistry at Heidelberg and Marburg and at the École Nationale de Chimie in Lille; 1996: Doctorate in philosophy at the University of Marburg; since 1996: staff scientist with the European Academy Bad Neuenahr-Ahrweiler GmbH; fields of research: philosophy of science, linguistic philosophy, culturalistic theory of social sciences, the theory of technology assessment, business ethics. Imboden, Dieter M., Professor Dr. sc. nat., Dipl. Phys., studied physics at Berlin, Basel and Zurich; since 1988: Professor for environmental physics at the Eidg. Technischen Hochschule in Zurich. Fields of research: Aquatic physics, modeling of environment systems, sustainable energy systems. Address: Professur Umweltphysik, ETH Zentrum VOD, Voltastrasse 65, CH-8092 Zürich. Kost, Michael, Dipl. Umwelt-Natw. ETH, studied environmental sciences; doctoral student at the Professur Umweltphysik of the Eidgenössische Technische Hochschule (ETH) Zurich under Professor Dieter Imboden; thesis title (provisional): “Sustainable development of the Constructed Switzerland”. Address: Professur Umweltphysik, ETH Zentrum VOD, Voltastrasse 65, CH-8092 Zürich. Kurz, Rudi, Professor Dr. rer. pol., studies of economics and doctorate at Tübingen. 1978-1988: Research fellow at the Institute for Applied Economic Research (IAW), Tübingen. Since 1988: Professor for economics at the Pforzheim University of Applied Sciences. Fields of work: Innovation research and environmental economics. Address: Hochschule Pforzheim FB 7, Tiefenbronner Str. 65, D-75175 Pforzheim. Jahnke, Matthias, Dipl.-economist, studied economics at the University of Kassel. Research assistant and doctoral student at the “Theory of public and private enterprises” chair at the University of Kassel. Research interests: Environmental economics, energy economics, ecological economics. Address: University of Kassel, Fachbereich Wirtschaftswissenschaften, Nora-Platiel-Straße 4, D-34109 Kassel. Nutzinger, Hans G., Prof. Dr. rer. pol., Dipl.-Volksw., Studies, doctorate and habilitation at Heidelberg; since 1978: Professor for the theory of public and private enterprises at the University of Kassel. Areas of work: Macroeconomic theory of enterprise, fundamental issues of economic policy, the history of dogmas, the ethics of the economy and enterprises, environmental economics and ecological economics. Address: University of Kassel, Fachbereich Wirtschaftswissenschaften, NoraPlatiel-Straße 4, D-34109 Kassel. Steger, Ulrich, Prof. Dr. rer.pol., Dipl.-economist. Following three years of military service in Germany, studies and doctorate at Münster and Bochum; 1976: elected to the German Bundestag (National Parliament), 1984–87: Economy and Technology Minister in the federal state of Hessen; 1987–94: Professorship at the European Business School, Oestrich-Winkel; 1991–93: Volkswagen board member; 1995–99: Head of the Forschungskolleg Globalisierung of the Gottlieb Daimler and Karl Benz Foundation; since 1995: Alcan Professor for Environmental Management, IMD, Lausanne. Address: P.O. Box 915, CH 1001 Lausanne.

List of Authors

267

Ziesemer, Thomas, Dr. rer.pol., studied national economics at the universities of Kiel and Regensburg. Doctorate on the theory of underdevelopment. Qualified for professorship with a monograph on the causes of debt crises. Fields of research: International economic relations, economics of development, the environment and labor, growth and technological changes. Address: University of Maastricht, MERIT, P.O.Box 616, Tongersestraat 49, NL 6200 MD Maastricht.